Surplus lines insurance carriers and basically insurance companies that are willing to take on large and/or riskier properties. Because they do so, they typically don’t have to be qualified by the State and therefore don’t necessarily have to follow the same guidelines that your typical domestic, private insurance company does. Whether that is good or bad remains to be seen how the case goes but, it will be different. Most surplus carriers we have dealt with in the sinkhole arena have very odd (for lack of better term) language. Many have older, antiquated definitions of what sinkhole activity is that really no one else uses any more. Many of them offer “sinkhole collapse” coverage verse “sinkhole loss” coverage. These often come with arbitrary and again odd definitions of what is required to qualify as a collapse. Some even go as far as describing how big the hole has to be (5 feet by 5 feet for example). Many require that the collapse have occurred suddenly, within a short time frame to qualify. In other words, these coverages are very different than the typical slow reacting sinkhole activity below the ground that gradually causes cracking damage. These policies try to limit their coverage to when an actual hole opens up out of nowhere. Lastly, many of these policies contain the same antiquated and odd language when describing what the coverage actually pays for. Many of these policies say that they don’t “fill holes” or that they don’t insure the land and try to really limit what they have to pay for. How you can fix a true sinkhole collapse without filling a hole is beyond me plus there is much debate about the purpose of filling a hole or whether underpinning a building is the same as filling a hole. To make matters even more complex, if the insurance company investigates the sinkhole claim by the Florida Statutes they may waive their right to use their own policy language. Long story short, these can be really complex cases because of the ambiguous language and antiquated processes that these carriers use. You really got to know what you are doing to handle these cases and be prepared for several legal battles over the policy terms. I certainly understand that many people and business are forced to turn to these types of policies but if you don’t have to, I wouldn’t recommend it.
June 5, 2016 by Morgan Barfield