Is doing the wrong investigation negligence?
We asked this question in a recent lawsuit. Our client has filed a sinkhole claim with their insurance company. The company then paid a professional engineer approximately $10,000 to investigate whether or not sinkhole activity could be found in the home.
The engineer did find sinkhole activity and estimated that repairs would amount to almost $50,000. As per Florida law, the insurance company then filed the report with the County, which makes this damage public record in order to educate present and future homeowners regarding the risk of a sinkhole in any given region.
The insurance company’s negligence
After the engineer reported these findings and they were made public, the insurance company then notified the homeowner that they did not actually have sinkhole insurance on their insurance policy, therefore making the findings irrelevant to them.
This means that the insurance company did not even validate the details of the homeowner’s policy before pushing forward with the claim, which should be the first step in any insurance claim. Both the insurance company and the homeowner wasted time and money on a claim that can’t even be brought to fruition, but that’s not even the worst part.
How this affected our client
Besides the time wasted on both sides and the money wasted by the insurance company on a claim that cannot even exist, the homeowner was put in a terrible position that they can no longer get out of.
With the sinkhole being reported to the state, the property value of their home sinks dramatically. Not only do they lose property value, but they do not have sinkhole insurance, nor will they be likely to have insurance in the future, as any insurance company knows better than to cover a home with known, unrepaired damage.
In the worst case scenario, if the homeowner decides that the only financially viable action is to sell the home, it may prove impossible to sell the home even as is, considering the fact that the home needs $50,000 worth of repairs is public record.
Therefore, our position was that the insurance company was negligent for completing testing and submitting the tests to public records for an insured that wasn’t even covered for sinkholes.
The judge’s decision
Unfortunately, when this case was brought to a judge, it was decided that our case was completely ridiculous. The judge strongly sided with the carrier and stated that the insurance company did nothing wrong, that the sinkhole report could not impact the value of their home.
After two years of litigation and one month before trial, the judge threw out the case. Fortunately, the homeowners have decided to appeal this decision. Only time will tell what a second opinion will decide, but we will update you with the results of that appeal.