Nov
18
2011

Does catastrophic coverage really cover anything?

Q: My neighbors behind me are having sinkhole repair. I felt a rumble under my home. Now we have a large section of grass on the side of our home that has caved in. We believe it is a sinkhole. I called my insurance co. They said oh, well, you are only covered for catastrophic coverage. This hole is close to my neighbors on the side of me.
Do I have any recourse??Thank You.

This is a very timely question considering our post earlier in the week about the case in Ocala involving Citizens. The coverage itself is defined in Florida Statutes 627.706(2)(a) and is as follows:

Catastrophic ground cover collapse? means geological activity that results in all the following:

1. The abrupt collapse of the ground cover;

2. A depression in the ground cover clearly visible to the naked eye;

3. Structural damage to the building, including the foundation; and

4. The insured structure being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure.

So to be afforded coverage you must meet all four prongs of this definition. The first two are relatively easy to evaluate. If the ground opens up and collapses you clearly meet the first two prongs. The latter two are more complicated. evaluating whether structural damage exists is an extremely expert driven and subjective evaluation. It will come down to an opinion of an engineer hired by the insurance company. All in all though, even if a collapse opens up near the house or next door, if it does not impact your house to the point where structural damage is occurring at your house, it will not be covered. The fourth prong is easier to evaluate but more difficult to achieve. It is a very rare circumstance where the county or city will declare a home to be condemned or oder it to be vacated. It just doesn’t happen that often. If your particular circumstance does not meet all four it is not covered. This again shows how worthless this coverage is. The insurance industry has sold it as a real help and security for homeowners but reality is there are only a handful of catastrophic claims in Florida every year.