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Homeowner to Citizens: I hate to say I told you so, but ...

Insurance companies are all about risk. They weigh the odds that a home will be damaged by a flood or a windstorm, and they decide how much taking on that risk will cost. If the cost is too high, the insurer just says no to the applicant, either for the whole policy or just for the riskiest coverage. Think, for example, about the health insurer that denies coverage for a pre-existing condition but agrees to cover everything else. Or the homeowners insurance company that covers fire damage but not flood or windstorm damage.

Risk management programs are the insurance industry's way to improve the odds of the best outcome for everyone. The insurer covers the risk and then helps the policyholder, through training or other tools, avoid the risk. The insurer gets to hold onto the premium, and the policyholder never suffers a loss.

But what happens when the policyholder tries to convince the insurance company that there's a pretty good chance of a loss if the insurer doesn't do something? One Florida homeowner found out the hard way last week when his and his neighbor's homes were destroyed by a sinkhole.

The homeowner claims that two years ago he called his insurance company, state-backed Citizens Property Insurance Corporation, about cracks in his home's foundation. Citizens dispatched engineers who concluded that the cracks were evidence of "sinkhole activity." In order to lower the risk of damage caused by the sinkhole-in-the-making, the engineers advised the homeowner to pump grout into the ground under the house. The project would run between $90,000 and $110,000.

The grout would not be enough, the homeowner thought. He believed that the engineers had underestimated the risk to his home, so he filed a lawsuit against Citizens asking for a more comprehensive fix.

For two years, the insurance company refused to budge. Then something happened that changed the homeowner's mind.

To be continued.

Source: Daily Mail, "Homeowner fought with insurance company for TWO YEARS trying to get sinkhole repairs," Associated Press and Ashley Collman, Nov. 15, 2013

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