Claim denied for structural damage – what now?
One of the most common questions we get is after someone’s claim has been denied based on a lack of structural damage is about the best way to proceed. Fortunately, there are several different options to match most any situation faced by the homeowner.
Request additional testing
One path is to request that the carrier does additional sinkhole testing. This is a smart plan if you feel your insurance company completed only a surface level test, and that if additional testing were done, the structural damage would be obvious.
There are pros and cons to every option. Regarding continued testing for sinkholes, it saves you money and could give you an idea early on as to whether sinkhole activity is present or not. Arguably more important, if the insurance company’s engineer finds sinkhole activity, it’s not likely they’ll be able to convince a jury to ignore it.
However, your insurance company could obligate the homeowner to pay $2,500 for the additional testing, as per Florida law. If this cost is brought up, remember that the $2,500 pays for the engineer of their choosing, not yours.
Evaluate for structural damage
If requesting additional sinkhole testing isn’t a good idea for you, you may choose to simply evaluate whether your home has structural damage at all, forgoing the sinkhole issue. To do this, you would have a second structural engineer evaluate the home. If this engineer finds that structural damage is, in fact, present, you would proceed with a lawsuit on just that.
We file these lawsuits as declaratory judgment actions. In other words, you are asking to win a declaration that structural damage is present and that the carrier now has to come test your home for sinkhole activity.
The great thing about this route is that these cases are easier, cheaper and faster to litigate. Also, since you’re not necessarily claiming that the structural damage is due to a sinkhole, you don’t risk confirmation of a sinkhole, which then depreciates the value of your property and makes it impossible to find a new insurance policy once your current policy drops you.
However, if you win this portion of the litigation, you then have to wait for your insurance company to complete testing, all for them to just deny your claim a second time if they don’t believe sinkhole activity is present.
Hire your own engineer
Lastly, you always have the option of hiring another structural engineer on your own dime. This is great for many people as this ensures the engineer has no bias towards saving your insurance company money. If the engineer acknowledges structural damage, you can then do sinkhole testing on your own, pushing forward with one claim if a sinkhole is found.
The best thing about this is that you know exactly what’s going on with your claim, your home, what repairs are needed, and how much they will cost. This path also means you only have to pursue one complete lawsuit, and then be done with it.
However, ignorance is bliss. If your engineer finds sinkhole activity in your home, the value of your property will depreciate, as it will be submitted as public record. Then, if you lose the lawsuit, you don’t get any insurance money to help with repairs. Thus, you are left with a property that isn’t worth as much and tens of thousands of dollars’ worth of damage.
Every case is different
The path you take depends entirely on the state of your home, your policy, your financial assets, and what you’re willing to risk. There is no wrong answer. Think seriously about what will be best for you and your home.