It is getting pretty redundant and somewhat annoying to hear insurance companies complain that they want the homeowners to repair their house and don’t want to write checks for settlements. Every insurance adjuster and every lawyer representing them seem to think that every homeowner that files a sinkhole claim makes a big pay day, pays the house off and lives in the lap of luxury for years to come. This is all just not true. Lets cut through the crap here people and finally talk about the truth.

When a homeowner has a mortgage, the mortgage company will almost always be involved in the settlement and that mortgage company will almost always require the home to be repaired with the settlement money. So first and foremost, lets put the rumor that homeowners never fix their house to rest. If a homeowner has a mortgage, they are almost always required to fix their house. Furthermore, most of my clients realize that they need to repair the home for the market value and the safety of their family. Most of my clients do repair their house after we settle. The difference is homeowners get to fix their house the way they deem fit. Is it really fair for the insurance company to come in with their chosen experts and force you to fix the house the way they tell you? Under what other scenario does that happen? The insurance company is not living in that house in ten years. Once a claim is settled the homeowner assumes all the burden of that house and what may happen in the future. They also assume the lost value of that home and want to do everything they can to protect their long term investment. The insurance companies do not care about these issues and the law does not properly compensate or protect homeowners for the long haul.

I have heard insurance companies tell my clients, hey fix the house and if you have trouble later we will come back out. Raise your hand if you are a homeowner who filed a sinkhole claim only to be dropped by your carrier at the first opportunity. Lots of hands going up. Now raise your hand if you filed a sinkhole claim, were dropped by your insurance company and were able to find sinkhole insurance with another insurance company. All the hands go down.

Plain and simple fact is, whether they fix the house the insurance companies way or get a settlement and fix it their way, these homeowners are on their own once they file a claim. Who can blame them for wanting the most long lasting proven repairs or to ensure when more problems occur and they aren’t insured anymore, they have money left to fix it. Grout typically has a 5 year warranty, underpinning typically has a lifetime warranty. Pavers around a pool or driveway may be better able to withstand continued movement but can be more expensive than concrete. Septic, plumbing and roof issues may come about that the insurance company think are not related. These are typical issues we see and hear and unless a homeowner has the cash in hand to do the repairs themselves, they are stuck. The truth about these claims is they are rarely about money and more about flexibility. The insurance companies offer absolutely zero flexibility to a homeowner.

So we have dispelled the myth that no homeowner ever fixes their house. Now lets look at the thought that homeowners who get settlements get some big financial windfall. If a sinkhole home is un-repaired, it typically will lose about 80% of its value and will be un-sellable on the common market. So if a homeowner does pay their mortgage off instead of repairing it where is the victory? They can’t sell that house ever again for anything over pennies on the dollar. They can’t benefit from any capital gains from a sale so they have a down payment to move up the property ladder into a bigger and better home. They owe nothing on a home that is worth nothing. Often times the “worthless” home they own is the largest investment they have ever made. They used life savings as down payments. They sweat and bled doing improvements or repairs. They saw their kids grow up and play here. Imagine how that feels to see all that go literally down the drain in a matter of seconds. How is that homeowner winning?

Now, what about the homeowner who does what the insurance company wants and fixes their house exactly to the specifications of the insurance experts. Let’s be honest, who really thinks that a sinkhole home regains 100% of its marketable value if it is repaired? Again, very few hands going up. So the homeowner who does the repair the insurance company forces on them will lose value in the home. On top of that, they will likely be dropped the next year and will have no money or help if and when future problems occur. Boy that sounds like a winner to me.

So why does the insurance company want you to fix your house instead of negotiating settlements? Let’s continue our honest trend here….they don’t. Insurance companies shouldn’t really care if you fix or not. It costs them the same amount of money and when they negotiate settlements they get a release from the claim and get to cancel the policy right away. It is actually more beneficial for an insurance company to negotiate a settlement. I am not buying this whole moral and ethical obligation to the taxpayers crap either. Insurance companies taking a moral stance over profits? Yeah right. It’s all about profits.

What they really want is for homeowners to think that their only option if they file a sinkhole claim is their way or the highway. As we already outlined, if you repair your home the insurance way, you are likely coming out a loser. The insurance companies know that and know you know that. A lot of insurance companies will tell you that up front. I have a lot of clients that told me their insurance adjuster tried to talk them out of their claim citing the fact that the home will be worthless and your premiums will go up, etc. So, if homeowners all come out as losers from these claims, they will stop filing. Public adjusters and attorneys will slowly go away. If claims stop getting filed and attorneys stop taking the cases what is left? Profits. The insane profits the insurance companies have been longing for.

We have had some lengthy discussions in the past about the appraisal process and what it means and the advantages and disadvantages. State Farm was by far and away the most common user of the appraisal process. Appraisal is not a statutory obligation so for the insurance carrier to demand it, it must be included in the policy. Only a hand full of insurance companies did or do include appraisal in their polices. State Farm will no longer be one of them. As of several months ago, people with State Farm insurance will start to see that new renewals will delete the language. The rumor is they wanted to pull it because they could not reconcile the language in the appraisal provision with the language in the statute and policy that says they can hold back the subsurface money. Based on the Nichols decision, which this attorney was the attorney representing State Farm on, State Farm had to write a check for all the damages once appraisal was completed. Good and bad here. Homeowners can avoid the pesky and often frustrating appraisal process and start getting their cases back in front of juries. The bad is State Farm will likely begin to take a harder stance on settlements arguing that they can hold back all the subsurface money now. We will see what happens, with all sinkhole claims, they seem to be moving targets and insurance companies positions change like the wind.

Everyone knows that USAA long ago took a stance that if a home does not exhibit structural damage (as they defined it) they could deny coverage. The problem is, again as we all know, is that the policy doesn’t define what structural damage means. USAA was making up its own definition, a very narrow one of course, and using it to deny claims. We discussed how most, if not all, State court judges have told USAA this does not work. There are a good bit of Orders floating around on this. Then the Middle District Court of Florida got in on the action with the Bay Farms decision. Bay Farms essentially told insurance companies you can not retroactively apply the new statutes defining structural damage to existing claims. I believe I wrote that perhaps the most overlooked part of that lengthy and very important decision was that the Judge recognized what the State courts had been doing in telling USAA that, absent a better definition somewhere in the policy, “structural damage” means “any damage to the structure”.

Now the Middle District has done more than just touch on that issue, it has slaughtered it. The case is Albert and Ann Marie Ayers v. USAA Casualty Insurance. In this case, the Plaintiffs filed a Motion for Summary Judgement asking the Court to decide how structural damage should be defined. As a side note, this office had filed nearly the identical motion in every USAA we have several months ago and these are all set to be heard in the upcoming months. The court broke down the analysis wonderfully. USAA argued that the term structural damage was not ambiguous and therefore, the Judge did not have the power to define a term that was not ambiguous. The court pointed out that if the term was so clear and unambiguous, then USAA should not have a problem with the Judge providing a plain and ordinary meaning of “damage to the structure”. Now, if USAA doesn’t like that definition of structural damage, then that means USAA feels the term is ambiguous and therefore, again, the Judge will decide how to properly define it. By law, he will define it most favorable for the homeowners, i.e. damage to the structure.

At the end of the day, the Middle District just told USAA no mater how you argue it, the result will be the same, you will lose and you will start paying these claims. We will see if USAA actually listens but, I doubt it.

Q: I just found out 4 weeks ago that I have sink hole activity.My insurance comapny has not denied the claim however they want to grout my home and I do not agree with this kind of repair on my $700,000 home. I have no MTG. They currently want to give me $200,000 for both cosmetics and subsurface.  I want pinning which costs alot more.  In your experience what tends to happen in this case?  Who usually wins the insurance co or homeowner?

We deal with these issues all the time. Insurance companies will fight underpinning tooth and nail if their selected engineer disagrees with it. These issue has really only been tried a couple times in Florida and unfortunately the insurance company has won the issue more than it has lost. Whether underpinning is necessary is a house by house analysis but there are general disagreements amongst engineers about using it. Some think pins should only be used in the most extreme situations, when the home is near collapse. Others believe that underpinning can be a useful technique in every case as it will provide added long-term stability for the house. We call this restorative verse preventative underpinning. The insurance companies will typically agree that the pins may help long term but then argue that they only have to pay for what is necessary now. The problem is, the insurance company wont be there tomorrow so you;re on your own. We can certainly help by taking a look at the report and having it reviewed by an engineer if you would like to contact us. Thanks.

Some background on the case is important before we discuss the results. My clients purchased a home in Ocala. Unknown to them or Tower Hill, there had been a prior claim made on the house. My clients noticed damage to their home that appeared to be sinkhole related and filed a claim with Tower Hill. Tower Hill investigated and did find sinkhole activity affecting the property but denied the claim because of the prior claim that was unknown to everybody when they bought the house. After many many months of litigation, Tower Hill eventually changed their coverage opinion and agreed to accept coverage for the loss. Of course that doesn’t mean they wanted to pay for it yet.

Stage two: The homeowners were not satisfied with the repair plan that Tower Hill’s experts recommended and wanted to challenge it before beginning repairs. Tower Hill demanded that the parties attend a neutral evaluation which we agreed to. The neutral evaluator recognized the obvious flaws in the original repair plan and even retained the help of an impartial structural engineer to assist with devising a proper plan. When the dust settled, the total repair costs were determined to be nearly $50,000 over what the home was insured for. A total loss as we call it. Tower Hill still did not want to pay.

Stage three: Tower Hill filed a Motion asking the Court to determine that it did not have to write the homeowners a check, even though the admitted they had initially breached the contract and admitted that the house was a total loss, unless they went out and did the repairs. Our firm working with co-counsel and future partner Ted Corless, asked the Court to simply grant us a final judgment. After all, this was a lawsuit and all lawsuits have to come to an end at some point. The judge granted our Motion and denied Tower Hill’s. The core of the ruling was that an insurance company can not wrongfully deny a claim and then come begging to the judges to save them from having to pay. (This is my summary, not necessarily verbatim what the judge said). Secondly, the judge recognized that she has to deal with the lawsuit in front of her, not the insurance claim, and lawsuits have to be finalized. In this case, since the parties agree on the amount of the damages, there was nothing left to fight about. The homeowners won at every stage and deserved some sort of closure. That is done with a judgement against Tower Hill who will now have to pay out, unless they appeal of course. This is a big decision on a hot issue that needed some resolution and clarity.

Q: For an Examination Under Oath (EUO), what can/can’t an attorney do for a claim filer? Can they interject into the questionning? Also, is the insurance company required to provide a reason for requesting the EUO if asked for an explanation?

An EUO is a contractual animal that virtually every insurance policy will contain. Essentially an EUO, or examination under oath, requires a homeowner to appear for a deposition style questioning at a time and place the insurance company demands. It also typically requires a homeowner to bring documents with them as well. Usually the insurance company has hired a lawyer to take this examination but occasionally it will be conducted by an insurance adjuster. First, the documents. Yes, you should bring any and every document that they ask for if you can. I do not believe a homeowner need to go and conduct an investigation to track down documents they do not have but, if you got them, bring them. Second, time and place. This has been the subject of some debate in my cases before but generally not all attorneys are bad people. If they schedule your EUO for a date and time that is inconvenient for you, try calling their office and ask to move it to a mutually agreeable date. They usually will.

As for the questions, there really is no limit on this. An EUO is not a true legal being, meaning it is not created by our rules of evidence or statutes. Generally, the insurance company can ask about anything that is relevant to the claim. So many insurers like to fight over this and frankly it’s usually not worth it. Yes the questions may seem mundane and immaterial to your case but the end result of not answering them may be worse. So what if they find out your mothers maiden name? Just give it up and get it over with. The less documents produced and the less questions answered equals more suspicion and potential that your case is denied. Insureds should know that there is relatively strong case law that says if an insured refuses to cooperate with the EUO process by either not showing up or refusing to provide documents or refusing to answer questions, their claim can be denied, for good.

An attorney certainly can be helpful, maybe not so much during the EUO itself as we can’t answer questions for you but, attorneys can help you prepare for the questions you will see, help you collect the documents you will need and most importantly make you feel more comfortable going into the EUO so that you can answer questions clearly and correctly.

Not many details on this yet but we know Tower Hill, after losing a trial just several months ago in Hernando County, decided to try it again. This time they tried a different county, Polk, and a different lawyer representing them and got the same result. A denied sinkhole claim they have to pay for now. I’m sure appeals will follow but for now, I will enjoy my weekend.

Boy do we hear this question a lot. Let me stick up for Citizens for just a brief second first off. Citizens is by far the largest insurer in the state and often times forced into insuring risky homes in risky areas. By default then Citizens assumes more bad policies than any other insurance company. Citizens also by default receives a lot more claims than any other insurance company. Thus frankly results in overworked adjusters who just don’t have the time to provide the attention each case needs. What happens is cases get lost, seemingly forever. Unless someone reminds Citizens of their ongoing issues, the case may never be found again. Citizens as a state entity and as immune from bad faith damages, does not hold a lot of incentive to provide great customer service or to keep its insureds happy. In fact, Citizens would probably prefer that most of its insureds go find insurance somewhere else. With that in mind, we do feel for Citizens and how overworked it is but, our priority is to our clients and making sure they are treated properly. It is true that sometimes the squeaky wheel gets the grease.

What we try to focus on many times is Florida Statute 627.70131 which essentially states an insurance company must either pay a claim or deny that claim within ninety days of receiving all the information it needs to make a decision. Now many insurance companies will continue to ask you for documents or to appear at an examination under oath or fill out a proof of loss. Many times this is just to buy time. As long as these requests are pending the insurance company may claim that the 90 days has not started to run yet because they still have not received all the information they need to make a decision and of course by doing so, they put the ball back in your court on why it is taking so long. Stay on top of such requests and make sure you comply and comply quickly and once everything is handed in, confirm in writing that there is nothing more they need from you. Then you can start your 90 day clock and if they don’t make a decision by then, a nasty letter and/or a lawsuit will usually suffice.

Q: My home has just been grouted for the second time. 8 years ago we had a major sinkhole 73 trucks of concrete. 8 years later the engineers were NOT able to find any traces of concrete under my home. How do you lose 650 cubic yards of concrete?

This is a great question that I can not answer completely as it is relatively technical even for the experts plus I don’t think there is a sure fire answer to the question. I can tell you that I have heard numerous explanations over the years including the ground water can wash away the grout or dissolve it or that it filtered into voids or caverns around the property or even into a nearby lake. I have also heard insurance oriented experts explain that you will rarely find grout if you drill again because the grout is usually meant to be angled under the foundation of the home. When you drill additional borings, they are not angled but straight down around the house, not under it. Finally, I have heard that the job was just not done right the first time around meaning that the grout wasn’t angled or pressurized properly or that they simply didn’t calculate the grout quantity correctly. I do not think there is a real solid explanation if it happens and it surely depends on the individual geology of the area but, it does happen relatively frequently and we represent several insureds with similar issues. At least your insurance company is doing the right thing by repairing again.

Q: My home has just been grouted for the second time. Our home although we are fixing it again at the request of the insurance company has lost value. Is there anything that can be done?

We addressed the question of whether you can sue an insurance company for lost value in our last post and generally the answer is no. There are unique situations where you may be able to. For example, we have a case where Citizens told our client she had sinkhole coverage, performed an investigation and then actually filed the sinkhole report with the county. Later down the road, it was discovered that she did not have sinkhole coverage and the carrier pulled the offer to repair off the table. The problem is the report had already been filed. This was now a publicly known sinkhole home that has never been repaired and would never be repaired unless the homeowners came out of pocket to do it themselves. The home plummeted in value and had no chance of recovering without being repaired. The only reason the home lost value was because of the mistake and lack of diligence on behalf of the insurance company. It is a rare situation where the insurance company actually created the problem. We will be suing the insurance company in that case to either fix the house or to pay the lost value. It is a unique situation and unique argument and we will see how it turns out. It will be a long road ahead for this homeowner.