TALLAHASSEE, Fla. – Sept. 30, 2011 – Effective tomorrow, Oct. 1, 2011, Citizens Property Insurance Corp. won’t automatically cover sinkhole damage through an insurance rider in certain high-risk areas without a pre-coverage sinkhole inspection. While the inspection is a new requirement for the state-owned property insurer, many private insurers already require sinkhole inspections.
The change applies to all new policies in the affected areas – both existing homeowners applying for first-time sinkhole coverage and people planning to buy a home. Homeowners who currently have sinkhole coverage through Citizens do not need to schedule an inspection.
The new rule is effective for home purchases in four Florida counties: Hernando, Hillsborough, Pasco and Pinellas. The inspection applies statewide, however, if an answer is “yes” to any sinkhole-related question on the insurance application.
A Citizens-approved inspection firm must perform the sinkhole inspections. The homebuyer must pay half the inspection fee directly to the inspection company and Citizens will pay the other half, though the fee is non-refundable even if Citizens turns down the sinkhole coverage application.
“According to published information from Citizens Property Insurance, a sinkhole inspection report could take up to 30 days to complete,” says Margy Grant, Florida Realtors corporate counsel. “To avoid any delays before closing, we advise Realtors to secure property insurance sooner rather than later.”
According to Citizens, a negative sinkhole inspection does not automatically disqualify a home from coverage, but it makes the approval process more complicated.
Grant says that both residential purchase contracts available from Florida Realtors contain optional addendums that would protect buyers if they failed to secure sinkhole coverage. “Both the FAR-9 and the FAR/BAR contracts allow a buyer to withdraw if they cannot get ‘comprehensive’ homeowner’s insurance at an agreed upon price,” she says. But Grant reminds everyone that they must use the correct addendum.
Citizens has posted a PDF list of frequently asked questions on its website about the new sinkhole policies. For more information, go to www.citizensfla.com
© 2011 Florida Realtors®
Reprinted with permission. Florida Realtors®. All rights reserved.
These inspections are bogus. We had one done on our house and the "inspectors" cited spaces between the walls and kitchen cabinet molding (yes, molding, not the cabinet itself) and cracks in the caulking around windows that were just replaced in the last six months. No one is passing these inspections. I heard from someone at the inspection company that 1 of 900 inspections are passing. This is a fraud and has created a liability where I have to disclose that we failed a sinkhole inspection when it was not executed in good faith.
Posted by: Pinellas home owner | November 04, 2011 at 11:33 AM