My insurance company recently told me they are going to file a copy of my sinkhole report, where they found sinkhole activity, with the county.  Can they do this?

Pursuant to “any insurer that has paid a claim for sinkhole loss shall file a copy of the report with the clerk of court”, each county has its own clerk of court, where the information is then cataloged.  Note, the language of the statute only permits this to be done with “paid” sinkhole losses, not claims where the insurance company’s engineering firm fails to find sinkhole activity.

During the 2005 legislative session, A wide variety of new were adopted.  Before you think this change was to protect home buyers, it was not.  Instead, it was designed to mark homes with sinkhole damage, so that no future insurance company would insure it unless the proper repairs could be documented.

Sinkhole Houses Being Sold “As Is”

One issue they were dealing with was the fact that people were being paid for sinkhole claims, not repairing their houses, and then selling them “as is.”  Later, the insureds would have to file new sinkhole claims, which the insurance companies would have to pay again.

The “denied” claims are not to be filed.  I will tell you as a practical matter that many insurance companies are slow to file these reports, as it actually costs them money to do so.  Plus, the failure to file them is not a basis to sue them.  Meaning, if you buy a house with undisclosed sinkhole activity, you cannot sue the insurance company for failing to file a confirmed report.

As we counsel realtors on sinkholes, it is always a good idea to do a document search at the county before you buy a home, and to review your home’s file with the building department.  These materials are public record and can provide you important information when purchasing a house.

Have a burning question you’d like to ask about sinkholes? Let us know.