Tampa-based HomeWisePreferred Insurance Co. was ordered into receivership onSeptember 2 for purposes of rehabilitation by the Second JudicialCircuit Court in Leon County. The troubled company ceased writingbusiness effective Sept. 2, 2010, and has no active policies oremployees. It does, however, have claims, and duringrehabilitation, the receiver (the Florida Department of FinancialServices) will continue to process and pay those claims.

Most of the 500 or so remaining claims are sinkhole related, acoverage issue that Homewise Preferred has been fighting for sometime. The battle has focused primarily on definitions and policylanguage. In April, a Florida court threw out its argument that itcould deny a homeowner's claim because, even through sinkholeactivity was found, there was no "structural damage" to the home.In August, the company argued that components of its insurancepolicies "inadvertently" included references to sinkholecoverage.

Sinkhole claims statewide have proliferated in recent years,drawing the attention of Florida insurers, consumers, andlawmakers. A comprehensive property bill (SB 408), waspassed during the 2011 legislative session that sought to addresssome of those concerns. According to the bill's primary sponsor,Sen. Garrett Richter, R-Naples, the sinkhole-related portions ofthe bill are designed to:

• Prevent large sinkhole claim payments based on frivolousdamage, which will eventually reduce premium costs for sinkholecoverage.
• Help keep houses and neighborhoods with verified sinkholeactivity safe by requiring policyholders with sinkhole claims touse all insurance proceeds to repair the property.
• Require additional sinkhole testing information to be filedwith the Clerk of Court, which will give potential homebuyersnotice that a sinkhole was found on the property.
• Require the disclosure of sinkhole claim payments, the sinkholereport, and the certification that repairs are complete to be givento the purchaser of real property before closing.
• Require the professional engineer supervising sinkhole repairsto certify to the homeowner that they were done correctly.
• Prohibit deceptive solicitations from public adjusters.

SB 408 was signed into law by Gov. Rick Scott in May, too lateto significantly address Homewise's sinkhole troubles.

HomeWise Preferred was licensed in Florida in 2006 and primarilywrote homeowners' insurance coverage. The company is currentlylicensed in Florida, Texas, and South Carolina. HomeWise Preferredis an affiliated company of HomeWise Insurance Co., an activeenterprise that is not in receivership. However, Demotech recentlywithdrew the carrier's Financial Stability Rating.