Apr
11
2011

When buying a sinkhole repaired home, ensure you can insure before closing

Q: We are looking at purchasing a home that has had sinkhole remediation. According to the seller the house is not insurable due to the claim the previous owner took for the sinkhole repairs. It shows on the tax records that the repairs were $30,000 and the house is worth more then this. So I’m wondering if they took out a large claim and only used part of it for the repairs. It seems unfair this would affect the next owner of the home.

This is something to be very careful about and to consider before buying a sinkhole home. It has been our experience that un-repaired sinkhole homes stand no chance of making it through underwriting with sinkhole coverage. Repaired homes have a shot at obtaining sinkhole coverage again although very, very, very minute. Now, the other coverages such as fire, water, hurricane, theft, etc. should not pose as much of a problem for purchasers. Sinkhole damage should have no relation to increased risk for a hurricane to strike, or a burglary to happen or for a fire to break out so in theory, a sinkhole claim should have little impact on obtaining coverage. We know it will have some impact though because a claim was filed, period. That alone can increase the potential risk of the house. Insurance companies not only look at the risk the house may pose but also the risk the homeowner may pose. If you have filed previous claims yourself and the house you are purchasing has had prior claims, this may make the risk of insuring this property and property owner too great for a lot of carriers. This is just one of those ways that carriers can hold something that was not your fault against you. Also keep in mind the property location. If you are by the water or in Pasco or Hernando counties, insurance will be tough to come by for anyone these days.

In summary, before buying a sinkhole home make sure the remediation was completed, signed off by an engineer and that proper permits were pulled. Ask to see the initial engineering report, the repair reports and engineering certification. You can go to the county and obtain some of this but make the seller produce everything they have to you. Also, don’t be afraid to shop insurance quotes before closing and make that a part of the conditions in your contract with the seller. Typically, if a repair was properly done and you are not looking to get sinkhole coverage, you should be able to have some success in finding a carrier to write insurance on the home for the other coverages. Every insurance company has their own standards and guidelines.

7 Responses to “When buying a sinkhole repaired home, ensure you can insure before closing”

  1. Seymour M Foos says:

    We filed a claim for sinkhole damage based on a property assessment from a public adjuster. There was evidence to suggest that we had sink hole damage. Our claim was denied and there was never any scientific evidence or tests done to determine if the visible damage was due to the sink hole peril. Secondly because our homeowner’s insurance policy was assigned to a private carrier from the Residual Market the carrier claimed that they were not the insurer at the time of the loss.

  2. Jim Pease says:

    When purchasing a sinkhole home, ask for a copy of the original ground subsidence study and the grouting remediation completion report. If they are not by the same company or signed by the dame engineer, be cautious. I’ve seen people get one program recommended and then hire someone else to do something cheaper, pocketing the difference. If you do go ahead with purchasing, demand a copy of the reports with the engineer’s raised seal; dont accept photocopies but get the originals.

  3. Jessica says:

    We bought a house knowing that it already had a sink hole. The sink hole was caused by a water main break in the street. The previous owners were elderly and did not have sink hole insurance. They decided to sell rather than invest in the repairs. While some insurance companies don’t offer sink hole coverage, there are many that do including major ones like Travelers and State Farm. After sink hole remediation repairs were made to our home, we had no problem getting sink hole coverage for our property.

  4. I am an insurance agent in the Tampa Bay area. we have many clients who contact us who have had prior sinkhole damage, existing sinkhole damage or even an open insurance claim. No comapnies we represent will offer a policy with sinkhole coverage and many won’t even offer coverage without sinkhole coverage in these instances. We however do have access to one carrier who does not have any issues insuring a home with any of the aforementioned scenarios. Homeowners in these situations do not have many options and are thrilled when we actually find them coverage. Let me know if I can help. 727.213.1890

  5. Please Help says:

    My wife and I are looking at buying an unrepaired sinkhole home that is bank owned. The damage looks very minor. How can we get a copy of the engineer’s report? Nothing is on file with the county – would Citizens Insurance have it? Can I get a copy of it?

  6. mbarfield says:

    If Citizens was the prior carrier then they would certainly have a copy of the report. I would also be surprised if the bank did not have a copy. The issue you may run into is Citizens may tell you they can not release those documents to someone who is not their insured. Citizens may provide you the name of the engineering company and you may also try going to them directly to get a copy. Good luck.

  7. daniel says:

    hello, my wife and i found this great property with a very nice home, however there is unprepared sinkhole damage. we have copies of the damage and what needs to be done to fix it. My question is how would we go about actually purchasing the property, we have some cash but not enough to buy it outright? do we have options?