To anyone living in Florida's "sinkhole alley,'' these headlines might sound familiar: "Huge hole opens behind house.'' "Homeowner finds 20-foot hole in driveway.''
But these incidents were in Pennsylvania, not here. And the way the damage claims were handled offers an alternative to Florida's beleaguered system for insuring against sinkhole hazards.
Pennsylvania is one of several states with insurance funds created exclusively to cover property in areas where the ground is prone to collapse into subterranean voids. In those states, the voids are not in limestone, as in Florida, but abandoned coal mine tunnels and shafts over which houses were later built.
Florida homeowners can still buy sinkhole coverage from private insurers as well as the state-run Citizens Property Insurance Corp., but premiums have soared. In the Tampa Bay area, Citizens' average annual premium for sinkhole coverage ranges from $306 in Pinellas County to $1,087 in Pasco.
In Pennsylvania, homeowners pay a maximum of $187 a year for subsidence coverage. There's even a discount for senior citizens.
Although the funds in other states vary — some are government-run, some act as reinsurers for private companies — all have similarly low annual rates. A $300,000 policy is $111 in Illinois and $60 in Kentucky. In the 37 Ohio counties where coverage is mandatory, the annual premium is just $1 a year with a maximum deductible of $500.
Pennsylvania's fund, the first of its kind, was created in 1961 after most private insurers stopped offering mine subsidence coverage. Part of the state Department of Environmental Protection, the fund currently insures 60,000 homeowners in "high-risk'' areas. Maps show towns, neighborhoods, even streets where the ground has been undermined.
Claims are filed with a DEP field office and investigated by the fund. Compensation for valid claims can't exceed the value of the policy or the replacement cost of the buildings, whichever is less. Pennsylvania's average claim payout over the past five years is $41,823 — compared to nearly $90,000 for Citizens in Florida.
"The claims are far in excess of those that are valid,'' said Lawrence Ruane, administrator of the Pennsylvania fund. Nine of every 10 claims are rejected because "the vast majority of times it's some type of construction or soils issue,'' not mine-related subsidence, Ruane said.
Although the fund has the authority to make repairs, it typically gives the money to the homeowner. Thus, as in Florida, there is no guarantee the money will be used to fix damage.
Florida's sinkholes differ in one key respect from other states prone to soil collapse.
"In terms of mine subsidence, you're dealing with known areas,'' Ruane said. "If you know where you've mined and know where a void is, you have more information to work with than you have down in Florida, where you don't know that much because you didn't create that problem, nature did.''
In a 2005 study, Florida's insurance industry said the subsidence funds in Pennsylvania, Indiana and other states "provide a natural basis'' from which to develop a model for a Florida Sinkhole Insurance Facility. But Florida lawmakers resisted the idea for fear such a fund would explode in size.
As it turns out, Citizens is becoming a de facto sinkhole insurance fund anyway — more Floridians now have sinkhole coverage with Citizens than with any other company.
Ruane notes that specialized insurance funds like Pennsylvania's are the result of insurance companies eliminating coverage for more and more types of perils.
"The trend used to be for blanket coverage," he said. "Your homeowners policy covered floods, fire, hurricanes and everything else, but it's become more exclusive. Is it getting to the point you're covered for a sinkhole only if it happens on the first Tuesday in the month? When did we get on this slope and when do we get off it?''