What is a Sinkhole Insurance Claim?

J.P. Gonzalez-Sirgo
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Founder of J.P. Gonzalez-Sirgo, P.A.

Florida Statutory law attempts to help the insured and insurers understand what would categorically fall under sinkhole insurance claims to give uniformity when it comes to the insurance industry’s customs within the state and to create more consistency in court decisions regarding this type of insurance coverage.  Florida Statute § 627.706 defines a sinkhole as “a landform created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater”. This type of damage occurs when a structure collapses into subterranean voids by dissolution of the underlying rock material such as limestone.

The statute further defines various terms related to sinkhole insurance claims. “Sinkhole activity” is statutorily defined as the weakening of a building’s underlying geological support as a result of water damage over time or because of an occurrence in nature. Do not mistake this with the term “Sinkhole loss” which means the accessible damage done to your building and its foundation due to sinkhole activity. This also includes contents coverage and extra living expenses for structural damage created out of sinkhole activity.

This statute also explains how an insurer can obtain sinkhole coverage in the following manner:

“The insurer shall make available, for an appropriate additional premium, coverage for sinkhole losses on any structure, including the contents of personal property contained therein, to the extent provided in the form to which the coverage attaches”.

Sacrificing extra finances for increased premiums can be seen as a strategic move to provide a safety net in the case that your property is damaged by a sinkhole. However, be prepared to subject your property to inspections by the insurer before issuing a sinkhole loss coverage plan. This can include but is not limited to an analysis of your structural foundation and natural support created by the location of your property. 

Under § 627.706(5)(3), insurers are required to explicitly state with specific language and in bold text if they exclude sinkhole loss coverage. The explicit disclaimer must be written in the following manner:

“YOUR POLICY PROVIDES COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE, YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN ADDITIONAL PREMIUM.”

This is beneficial to the insured because they will not be caught off guard and if an insurer fails to include this language, they may be estopped from denying coverage. This statute also offers other  protections for the insured by requiring notification if sinkhole coverage is not eligible to be renewed and also requires the premium increase to be actuarially reasonable. Typically, the level of reasonableness of the increase will be based off a comparison to standard insurance industry practices. An experienced insurance claims attorney can help you analyze your policy and determine whether your insurer is in violation of any statutory provisions created by state law. 

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]

Source:

-Florida Statute § 627.706

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