Orlando, FL -- (SBWIRE) -- 04/16/2013 -- Property insurers must offer sinkhole coverage, a Florida court has ruled.

The Florida First District Court of Appeal upheld a decision by the state Office of Insurance Regulation (OIR) that requires property insurers to offer sinkhole coverage up to the full coverage limit for the dwelling.

“Sinkhole coverage is increasingly important in Florida, and this decision requiring sinkhole coverage is good news,” said a representative of FloridaInsurance.com, a Florida home insurance agency.

Farm Bureau had asked for approval from state regulators for a change in its endorsement form that would restrict sinkhole coverage to one quarter of the total coverage. The OIR declined to approve the change, and Farm Bureau took the matter to the state courts.

According to the court, the sinkhole coverage amount should be the same as the total coverage provided by the policy. In addition to optional coverage for sinkholes, property insurers in Florida are required to provide insurance for catastrophic ground cover collapse.

The relevant rules for property insurance are set down in Florida Statute 627.706. However, according to the state Department of Environmental Protection, sinkhole coverage may be denied if a sinkhole has been reported in the “area” near the property the owner wishes to insure. The definition of “area” in this context remains nebulous, and may only be resolved by more specific legislation or by the courts.

One problem with the current rules is that homeowners may avoid having minor sinkhole damage repaired, for fear of losing their coverage. State Rep. Mike Fasano has stated that it should be illegal for an insurance company to drop a homeowner's policy for that reason.

Others have said that the definition of sinkhole damage is too vague, and that when homeowners make a claim because of minor cracks in driveways or patios, insurance rates go up. Between 2007 and 2011, sinkhole claims nearly tripled, but a bill passed in 2011 tightened loopholes on such claims.

A Seffner, Florida man died recently when a sinkhole opened up under his home. Officials called off a search for the man because it was too dangerous, and the house was ordered to be demolished where it stood. Days later, another large sinkhole opened up outside of Tampa.

While such large sinkholes are relatively rare, the entire state is particularly prone to the phenomenon, due to its geological makeup. Sinkholes can occur suddenly or gradually, and they can be large or small. Only Florida and Tennessee require insurance companies to offer sinkhole coverage.

To learn more call 1.888.525.2210 visit http://www.floridainsurance.com.