Sinkholes Could Put Insurers In A Hole
Published: May 7, 2006
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Like hurricanes and humidity, sinkholes are part of life in Florida.
That's especially true in the Tampa Bay area, the state's sinkhole hotbed.
In Pasco County, sinkhole reports since the 1960s have clustered along the heavily populated west coast. But as development pushes into the county's thinly populated center, builders may place thousands of people in the path of future sinkholes - a situation that could further strain insurers.
In the next 20 years, the developers of Connerton, Bexley Ranch, Wiregrass Ranch and smaller communities will put more than 60,000 homes - and potentially more than 100,000 new residents - on farmland with little history of reported sinkholes.
For builders such as Pulte Home Corp. Vice President Scott Neil, the man guiding plans for 16,000 homes on Wiregrass Ranch in Wesley Chapel, a lack of reported sinkholes is reason enough not to look for potential sinkholes on the 5,000-acre property.
"We really don't" look for them, Neil said. "I don't think anybody does."
Sinkhole experts worry that approach may be misguided. They say state records rely on people reporting holes on their land. In rural areas, the likelihood of sinkholes going unreported is greater.
Tom and Rita Laber learned about Pasco's proclivity for sinkholes shortly after retiring from Virginia in 2003. They bought a small, 1970s-vintage house in Port Richey's Regency Park neighborhood - the hottest of the county's hot spots for reported sinkholes.
They eventually noticed cracks in the patio and the pool deck. Tests suggested a sinkhole lay under their house.
"We didn't realize it was here when we looked at" the house, Tom Laber said.
For nine months last year, repair crews pumped 28 truckloads of grout - a thin sand-and-cement mixture - under the Labers' house to plug the sinkhole. Since then, the cracks in the patio have stopped widening, but the pool continues to lose water, Tom Laber said.
In Regency Park, it seems everyone has a sinkhole or expects to have one.
Since the late 1960s, 23 residents have reported sinkholes on their property, according to the Department of Environmental Protection, one of three agencies that record sinkholes.
Could builders in central Pasco be creating dozens of Regency Parks? To answer that question, it helps to understand how sinkholes work.
Florida sits on top of a bed of limestone shot through with holes. Those cavities hold the Floridan Aquifer, which provides drinking water for the people, plants and animals who live atop the clay and sand that blanket the limestone.
Regency Park, like the rest of Pasco's coastal strip, sits on sand that rests on the bedrock. Those conditions create sinkholes as rain - or leaky plumbing - washes sand into the Swiss cheese-like limestone, producing shallow, slow-growing depressions.
The same conditions lie below some of the fastest-growing parts of Wesley Chapel and Land O' Lakes, including Dupree Lakes, Seven Oaks and the western half of Wiregrass Ranch.
The U.S. 41 corridor, running from Carrollwood to Brooksville, rests on a layer of ancient clay that protects the region from washout sinkholes common on the Pasco coast. However, the clay isn't thick enough to support itself if the limestone below gives way.
That means Connerton, Bexley Ranch and other central Pasco communities could be vulnerable to sudden collapses as rain trickling through cracks in the clay erodes the ceilings of underground voids, said University of South Florida geologist Mark Stewart.
Previous collapses formed the lakes and cypress heads that pepper central Pasco.
Uncertainty, Insurers, Rising Costs
The good news, Stewart said, is that new sinkholes are rare. The bad news is that ancient sinkholes can reopen centuries after they were buried by nature.
Possible sinkhole triggers include rumbling bulldozers and falling water tables. No one knows for sure when or where old sinkholes may reopen, Stewart said.
"It's kind of like the stock market," Stewart said. "Analysts can always explain why things happened after the market closes on a particular day, but nobody wants to predict what will happen tomorrow."
That uncertainty makes life hard for the state's insurers, who must cover sinkhole damage in their regular policies.
Although sinkholes are a small part of insurance claims, each sinkhole costs thousands of dollars to investigate, repair or - if the claim is disputed - resolve in court.
Cracked masonry doesn't always reveal a sinkhole, but the burden is on insurers to prove a specific claim isn't a hole. That can be hard to do, Stewart said.
"Sinkholes are often not proved," he said. "But they're often not disproved."
Sinkhole losses have helped push many private insurers out of the state, adding to the burden on the state's Citizens Property Insurance Corp. That has helped drive up Citizens' premiums.
"The probability of anyone having a sinkhole is low," Stewart said. "The problem is everyone is paying for it."
Stewart's research suggests that, all things being equal, any homeowner in the Bay area has about a 1 in 100 chance of experiencing a sinkhole in a given year.
That said, sinkhole claims have risen sharply since the 1990s. In 1992, sinkhole claims consumed 0.05 percent of a homeowner's premium. A decade later, that had risen to 3.7 percent, costing insurers $67 million statewide, according to a 2005 report by researchers at Florida State University's College of Business.
The bulk of those claims have fallen on Citizens, which paid out $42 million last year in Pasco County.
"It appears that Citizens may have become the sinkhole insurer of last resort in the four-county Tampa Bay region," the FSU report said.
Alan Marshall takes credit for surging sinkhole claims. The Pasco attorney fights insurers on behalf of homeowners.
"There's more of an awareness because of attorneys like me," Marshall said recently. "People are more aware of their rights. Nobody wants a sinkhole."
Marshall is critical of a bill passed Friday by the Legislature aimed at reducing the costs of sinkhole claims.
If approved by the governor, the legislation will force homeowners to pay a deductible for sinkhole damage. Disputed sinkhole claims would go to arbitration rather than court. "That's not going to hurt the people with half-a-million-dollar homes," Marshall said. "Poor people will be out of luck if they have to pay for their own sinkhole claims."
Marshall also is critical of builders who don't search their land for potential sinkholes before starting construction.
Ground-penetrating radar and other tools can look underground for the signs of sinkholes, giving builders a chance to avoid those areas, Marshall said.
Stewart estimates ground-penetrating radar might add $3,000 to the cost of a quarter-acre lot, less if dozens of lots were tested at once.
Other sinkhole-protection methods, such as building with stronger slabs or pinning houses to the underlying stone, would raise the upfront costs of houses, but reduce sinkhole damage and claims, Stewart said.
Mandatory Searches Questioned
So should Pasco County require builders to account for potential sinkholes as they must account for wetlands or endangered species? Why not make companies build sinkhole-proof homes?
Pasco County officials say such mandates would be more expensive than they're worth, given the uncertainty of where or when sinkholes will happen.
"There isn't enough affordable housing in Pasco County," Commissioner Pat Mulieri said. "Do we add an extra cost if it's not necessary?"
Stewart and Marshall doubt the political will exists to require sinkhole testing or sinkhole-proof homes.
"The developers will not do it voluntarily," Marshall said. "If they don't know, then they can't be held responsible."
Builders say there's no reason to look for things they might not find.
Scott Neil of Pulte said the builder is moving forward with its normal predevelopment testing. That list includes soil borings to look at groundwater and drainage, but nothing related to sinkholes.
"Based on our past experience, we certainly don't expect" sinkholes, Neil said. "The surrounding areas are built out on similar soils, and they haven't had sinkholes."
TO LEARN MORE
To find out whether your property has been reported as having sinkhole activity, go to the Department of Environmental Protection's sinkhole database, www.dep.state.fl.us/geology/geologictopics/sinkhole.htm.
