Citizens to Pay Sink Hole Claims Directly

Sinkholes that are as damaging as the one that opened in Dunedin this week are covered under an insurance clause called catastrophic ground collapse. Every homeowner's policy in Florida has the clause. But where it gets sticky is when the ground shifts, causing cracks in walls and driveways.

Now Citizens Insurance wants to change how it pays claims for the cracks. Beginning early next year, if approved by the Citizens board, the insurer will select the repair company and then pay them directly.

Michael Peltier says, while voluntary, it is an effort to make sure damage is fixed.

"I mean, your neighbors want to make sure that the properties next to them are sinkhole free or have at least been repaired to the point that their properties are not endanger," said Peltier.

The direct pay plan was encouraged in the 2011 law as a way for citizens to cut its sinkhole losses.

Insurance experts say beginning with a voluntary direct pay scheme is a smart way to go.

"When you do a program of this magnitude, to make it mandatory right off that bat, it's going to have some kinks. So let's get the kinks work out, get homes repaired and make sure everybody is in a good place," said Lisa Miller.

But the direct pay plan is likely to become mandatory in the near future, and advocates for policy holders say it is trampling on homeowners rights.

"There's just going to be a lot of bias and they're going to undercut the work so that they can get on to the next job and make more money," said Nicole Vinson.

The full Citizens Board votes on the direct payment plan in December.

Next week Florida realtors will unveil a web application that will help you understand the risk of sinkhole activity in your neighborhood.