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.