Progressive sinkhole damage vs. shifting coverage
Many homeowners find themselves in the unfortunate position where they find sinkhole damage in their home develop from past damage that existed but did not appear to be major while they had different insurance coverage.
For example, let’s say you discover obvious signs of a sinkhole in your home, alert your spouse, and you spouse advises that there had been a crack there for years! Unfortunately, your insurance coverage (whether the details of your policy or the insurance company itself) has changed since the initial crack appeared.
The dilemma
Depending on the details of your individual situation, you may be faced with a variety of problems.
If you’ve kept the same insurance company but your policy has been changed, will you receive the same coverage you have presently or the coverage you had at the time when the crack was first discovered? The result of your claim may change drastically depending on which coverage the carrier defaults to.
Or, if you’ve changed insurance companies entirely, to which company do you submit your claim – the one you currently have an active policy with or your old policy? Even if you haven’t had the old policy for years, that may very well be the one you use.
Loss in progress
The reason why these questions come about is due to a theory called “loss in progress”. Sinkholes are different because while fires, hurricanes, or other similar disasters have a very definite and understood beginning, sinkholes operate differently.
Most sinkhole losses are gradual in nature, some of which developing over years. With this gradual development, it can be difficult to ascertain when exactly the damage happened. Therefore, whenever the damage is first officially considered to appear defines how your claim moves forward.
What to do
In the situation in which your policy has changed but your insurance company has not, you are left to the whims of your insurance company. While there’s not a whole lot for you do, you should at least be aware as to why your coverage may not be as expected.
However, if you have changed companies completely, your claim could get much more complicated. You may want to file your sinkhole claim with both insurance companies. As some companies’ policies may have different definitions for “date of loss”, you can hopefully take advantage of the one which will benefit you.
Otherwise, the insurance companies may be left to battle over when the sinkhole loss officially occurred, and is therefore responsible for coverage. These situations can get hairy. In this case, you may have to participate in something called an “examination under oath”.
There is nothing wrong with submitting claims to both companies – this is not considered fraud. In fact, there are no downsides at all for contacting both carriers, and you will maintain your rights under both policies.
Prevention is key
While sinkholes can be difficult, I always suggest conducting routine inspections of your home for damage; don’t look over potential signs of a sinkhole, as you may make your life much more difficult for yourself. Instead, use your renewal period for insurance as a reminder to document the state of your home.
