Sinkholes and Insurance

As a brief addendum to my previous post on the sinkhole problem in Plant City, Florida, I find it important to add one more note. Since posting the column, some have suggested that those property owners with property insurance would fare well under the circumstances. However, it’s important to point out that no matter who actually pays for the repairs, the money has to come from somewhere.

Insurance is a risk pool. When the risk is higher, the cost for the insurance is higher. Having multiple sinkholes in an area represents an increased risk. If the sinkhole repairs are paid by insurance companies, those companies would have to make up for that loss by possibly raising insurance premiums for areas at risk for these sinkholes.

In the end, there is no getting around the negative economic costs of the sinkholes. There is no free lunch.

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2 Responses to Sinkholes and Insurance

  1. Sheryl says:

    More excellent analysis and info from Adam (both posts)! The government must wear rose-colored glasses…it’s the only way we don’t fall apart completely!

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