My home has a confirmed sinkhole, which the insurance company paid to repair. However, there is no question that the value of my home, even after being fixed, is less than it was before my claim. Can I get paid from the insurance company for the loss of value?
This is a hotly contested issue, with many homeowners unsuccessfully arguing for the loss of value. Under most property insurance policies, homeowners are entitled to be paid for the accidental direct physical loss caused by a covered peril. Because sinkholes and sinkhole damage are covered by your policy, you are entitled to be paid for the damage, as well as the displacement to your family while the home is being repaired. A loss associated with the decrease is commonly referred to as “stigma” damages, as it is the stigma associated with the repairs that has caused the value to decline. It is not the result of actual damage, but the concern a future owner that they, too, may have to deal with the sinkhole reactivating. These kinds of economic damages have been found not to be recoverable.
This is not to say you cannot impact this issue. First, make sure when you do the repairs, that you have completed all of the recommended repairs. Do not cut corners, and make your insurance company pay for a competent general contractor once the subsurface repairs are done. Second, make sure you have received a certification from the subsurface repair company, or the engineering firm supervising the repair, that the repairs have been completed appropriately. Ask that they return a few months later, to again re-inspect the home for any additional damages that may have occurred. If there is new damage, make sure the insurance company pays for it. And, again, ask the engineering firm to prepare a follow up report to you.
By doing these extra steps, you can reduce the stigma associated with the repairs, and assure the new buyer that the repairs we done properly, inspected, and completed. I have some other ideas, but they depend on the nature of the loss.
Read our tips on filing a sinkhole claim.
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