Sinkhole Insurance: Do You Have That Sinking Feeling?

I have to wonder something in regards to insurance company payouts for sinkholes.  As I understand it currently, when an insurance company does settle a claim, the property owner is not obligated to use those funds to repair the covered damages.  Which of course is the property owner’s privilege.  '

When a insurance  policy is purchased there are limits written into the policy. Could there not be a clause set into the policy that if there is a claim on the policy where the claim exceeds a certain preset percentage, then the property owner surrenders title to property?  I believe this the situation we have with car insurance.  If you are involved in a accident, where the car is a total loss, then the insurance company settles with the policy holder.  This is the basically the same situation, the house is a total loss.

In those situations where there is a payment made, the property owner has to demonstrate that they made a real good faith effort to correct the sinkhole.  As I understand the current situation, Tom can file a claim for a sinkhole and get a settlement, then sell the property to Dick.  Dick then files a “new” claim for a sinkhole and he in turn gets a settlement.  Then Dick sells to, and on and on it goes.  In the end we all get stuck with the bill.  

As a condition of sale, Tom should provide Dick with an affidavit stating that there was a sinkhole claim made and paid.  The proceeds of the claim where used to effect repairs and provide all relevant documentation showing what repairs where and how they where made or that no repairs where made.  An insurance company should have the right to refuse to provide coverage if there was claim made and paid when no repairs where made.  The problem continues to exist.  

I would argue that we permit building in areas where realistically the risks involved in building in those areas outweighs the benefits.  There are any number of residential communities through out the state that have been built in areas that will flood in the event of a hurricane.  All too often the individual’s attitude is, "Why should I care I have insurance - they will rebuild whatever I lose."  And so the losing cycle continues.  

We have to find ways to break the cycle.  An insurance company can decline accepting a risk.  Why doesn’t Citizens simply say "no" to the outsize risks that are forced on them?  Maybe not immediately, but have them tell a policy holder that four years out we will no longer offer you coverage on this property.  Self insurance is an option or finding another company is also an option.  Certainly the political firestorm of taking Citizen’s out of the market would be huge, however it is inevitable.  The state, regardless what state it is, does not belong in the insurance business, no matter what type of insurance it is.