Sinkhole insurance reform talked up in the Senate

The Legislature appears ready to do some of the heavy lifting to deliver on Gov. Rick Scott's promise to bring sinkhole insurance reform to Florida.

During the campaign, Scott said sinkhole insurance claims are a major cost driver in insurance rates, and that claims are filled with abuse and fraud because insurance companies have little choice but to pay out.

"The current claims process for sinkholes is ineffective and riddled with abuse," Scott said as part of his property insurance platform. "Presently, for an insurance company to reject a sinkhole claim, an expert must verify with 100 percent certainty that a sinkhole did not cause the damage. There must be structural damage for an insurance company to be required to pay a claim, however, 'structural damage' is not currently defined in state law.

"As Governor, Rick Scott will promote policies to reduce the abuse and fraud that is driving our insurance costs up by proposing an objective measure of sinkhole damage and defining structural damage."

On Jan. 11, 2011, members of the Senate Banking and Insurance Committee discussed a detailed state report (You can view the report yourself here starting on Page 23.) on sinkhole insurance claims and suggested the exact types of changes Scott proposed.

Among them:

• Creating a legal definition of "structural damage" based on scientific standards.

• Placing a time limit, or statute of limitations, on filing sinkhole claims.

• Eliminating the "one way" attorney's fee provision that requires an insurer to pay a home­owner's legal fees if it loses in court, but if the insurer wins, the homeowner isn't liable for fees.

• Requiring greater disclosure by home sellers to buyers on the amount of sinkhole claims and whether the money was used to repair the home.

"The magnitude of this problem is extreme," said the panel chairman, Sen. Garrett Richter, R-Naples. "It's affecting every homeowner in our state."

The talk of reform is enough to move this promise to In the Works.