While most homeowners do not anticipate that their home will be damaged by sinkhole activity, this risk does impact homeowners in many areas of Florida. There are more sinkholes in Florida than in any other state, so the risk of this type of damage to homes is genuine. Although mortgage lenders might not impose a requirement that insurers purchase sinkhole insurance, the disproportionate amount of sinkhole activity in the state might make such an investment financially prudent. All insurance companies must make sinkhole coverage available to policyholders who want this type of coverage. While most homeowners will never have their home swallowed by a massive crater, foundation cracks and similar damages is much more common. Because of changes in Florida law in 2012, many incidents of sinkhole damage are not fully covered. The revised law imposed significant restrictions on sinkhole claims.
Under Florida law, a policyholder seeking to fully cover damages for sinkhole damage must establish:
- An abrupt collapse of the land occurred.
- The subject property suffered structural damage.
- The property was condemned as a result of the damage.
These changes in Florida law related to sinkhole coverage have had a devastating financial impact on many homeowners. A woman in Marion County, for example, filed a claim after her walls separated from the ceiling; wide cracks appeared in her foundation; and the doors would no longer open. Although the homeowner had an engineering report that found “catastrophic failure,” the insurance company denied the claim.
Under this revised version of the law, insurance carriers focus on the method of repairs so the carrier can minimize the value of such claims by focusing on cosmetic above ground damage. Because the Marion County homeowner became frustrated after fighting with her insurance carrier, she settled the claim for a $70,000 loss according to a WFTV news report.
Challenges in pursuing sinkhole claims in Florida put a premium on the neutral evaluation process. The insured can pursue this remedy if the insurance carrier provides a sinkhole report. If the insurer determines damage to a covered structure is consistent with sinkhole activity, the carrier must hire a professional geologist or engineer to undertake the process of testing and producing a sinkhole report. A policyholder should submit a written demand for geological testing within 60 days of denial of the insurance claim to initiate the process. The policyholder must pay half of the actual costs or $2,500 toward geological testing. If there is verification of the sinkhole, the carrier must reimburse this cost.
When the neutral evaluation process is requested by either party, the process is mandatory. However, the determination of the evaluator is not binding, so both parties retain their rights to pursue a lawsuit. A professional geologist or engineer will serve as an impartial referee to evaluate whether sinkhole damage occurred and to assess the appropriate method of remediation. The insured and insurer will both appear at a conference, so the referee can accumulate information and determine an appropriate resolution.
Policyholders who have suffered a sinkhole loss can invoke his or her right to neutral evaluation either by submitting form DFS-14-1764 or making a request online at https://apps.fldfs.com/eservice/MediationInfo.asp.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].