As noted in previous blog posts, USAA, the carrier known most for its insuring of active military personnel takes a very narrow position regarding the sinkhole claims?? It is going to cover under its policies. Although the language in its policy in contrary to this position, USAA takes the position it can deny homeowners’ insurance claims for settlement damage, even when its own sinkhole investigation concludes sinkhole activity is present and impacting its house.

Although it had previously been insuring homes and paying claims based upon the exact same language, USAA believes it need only pay claims for confirmed sinkhole activity when the damage reaches its subjective definition of what constitutes a sinkhole loss. They claim that fact the policy states that it will pay for “damage to the structure,” as being interpreted as a “technical definition” of sinkhole loss. This definition would require the damage to reach a particular threshold, such that it impacts the load bearing capacity of the home. This definition is not present in the USAA insurance policy, and this argument requires a complex gymnastics of legislative intent of the source statute.

To complicate and delay matters further, USAA has now elected to retroactively apply the changes to the sinkhole laws enacted in May 2011 under Bill 408. This decision applies to many of their claims made even before the law changed. As the new laws were just enacted, few courts have been provided an opportunity to consider and decide on the constitutionality of this decision. Our firm has been battling USAA for some time on this issue and it will come to a head soon as several trials on this issue are looming.

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