Tag Archives: Engineering Firms

Insurance Policies and Coverage Issues

Property Coverage and Sinkhole Investigation Reports

My insurance company just sent me the report following my sinkhole investigation, along with a letter that really tells me nothing. When I read this, what should I be looking for?

Reports prepared by geologists and geotechnical engineers following the investigation of a sinkhole claim can be very difficult to understand. They contain a voluminous amount of general information, much of which is of a highly technical nature. However, there are certain issues to look for in reviewing a sinkhole investigation report prepared by your insurance company’s consultants.

The Florida Statues require professional engineers and professional geologists performing sinkhole investigations to “perform such tests as sufficient, in their professional opinion, to determine the presence or absence of sinkhole loss or other cause of damage within reasonable professional probability…”

Engineers and geologists performing sinkhole investigations typically perform tests including geophysical surveys, such as ground penetrating radar and electrical resistivity. These studies look for odd areas (called “anomalies”), which may or may not be sinkhole activity. At a minimum, the engineer or geologist should study these further.

There are several indicators of sinkhole activity, which may be uncovered by an SPT boring. First, the SPT borings may indicate the presence of subsurface voids or cavities (usually indicated in the boring logs as “weight-of-rod” or “weight-of-hammer” conditions).  Such voids or cavities often indicate sinkhole activity.  Second, there is often a “loss of circulation,” which is a movement of fluid in the drill rig showing a void. There are also more subjective indicators, which relate to the comparative density of the soil above and below various depths in the boring (very technical stuff). If you find any of these facts in a sinkhole investigation report prepared by your insurance company’s experts or have any other questions concerning the report, you should have the report reviewed by a competent professional.

Read my tips on filing a sinkhole claim.

Have a burning question you”™’d like to ask about sinkholes? Let us know.

Finding Sinkholes

The Significance of Sinkhole Activity in a Neighborhood

Do insurance companies look at the presence of nearby sinkholes in evaluating if a home has been damaged by sinkhole activity?

Virtually all engineering firms who conduct investigations of Florida sinkholes conduct a “regional” evaluation before offering their opinions. This means they examine regional maps prepared by the United State Geological Survey or the Florida Geological Survey. The purpose is simple: If there is sinkhole activity in a particular area, it is more likely to be associated with sinkhole activity nearby. Scientifically, for example, it would be very difficult to be able to rule out sinkhole activity at a particular home, if there is sinkhole activity on an adjacent property. Sink holes in Florida are rarely that limited in their reach.

When the limestone formed beneath most of Florida, it occurred over large areas of land. The action of water, rock, and organic material from millions of years ago was impacted by climate and other natural forces. Stating the obvious, the geology was not produced in isolated areas but impacted areas the size of counties and even complete regions of Florida, spawning Florida sinkholes all across the state. Because of this, when sinkholes in Florida have been identified, sinkhole investigations have found consistent areas where sinkholes occur more frequently.

In Pasco, Pinellas, Hernando, and Marion counties, sinkhole activity is more likely to occur, which is why it is always important for insurance company investigations to consider nearby sinkholes. (Neighborhoods built in the past 15 years may even be more vulnerable because of inadequate testing for sinkholes.) Additionally, the attempt by insurance companies to frequently ignore this additional information, which is usually in their possession, is why Florida sinkhole lawyers are as busy as they are.

If you are aware of sinkhole activity in your neighborhood and your sinkhole claim has been denied, this should be a concern, as it suggests the insurance company’s engineer may have been mistaken when evaluating your home. Contact us toll free at 888-98-BBLAW.

Have a burning question you’d like to ask about sinkholes? Let us know.

Finding Sinkholes

Sinkhole Investigations and New Home Construction

I’m in the process of closing on a lot that we intend to build our dream home on. What can we do before construction to make sure we don’t have a sinkhole problem?

I speak personally to this issue. I signed a contract for a new home to be built. We asked to conduct testing on the lot before we closed, and were denied this right until we closed on the lot, but before we began the actual construction. Two weeks later, after to Standard Penetration Tests, we found patent evidence of sinkhole activity. We worked it out with the contractor, who permitted us to cancel the agreement with them.

Conducting sinkhole investigations is costly, but it may be more costly not to. Consider this: Doing two standard penetration tests cost us $3,000, but that money was well spent because it saved us a great deal of money in the long run. If you are interested in conducting a sinkhole investigation, you need to have the testing done prior to the pouring of the foundation. The important thing would be to look at the footprint of the house and test in that area. If you provide the engineering firm the building plans, they will be able to recommend the testing locations.

Also, do your own sinkhole investigation of your adjacent property owners. Ask them if they have had any problems with settlement or if they have ever filed insurance claims. While this may be a bit forward on your part, people will often share their experiences, especially because it will often include complaints about problems with insurance companies.

Lastly, you will want your engineering firm to also conduct some shallow soil work, in the form of hand augers to a depth of about eight feet. This is because you will want to determine if you have any other, soil-related problems, as well as sinkholes. Problems with excessive organic material, expansive clay, or poorly consolidated sand can also cause significant problems for you.

As always, if you have any problems locating an appropriate engineering firm, we can offer you several options. Good luck.

Read our tips on filing a sinkhole claim.

Have a burning question you’d like to ask about sinkholes? Let us know.

Insurance Policies and Coverage Issues

Sinkhole Insurance Claim Delays

Question: The experts say there’s sinkhole activity on my property but does it necessarily mean the insurance company will cover the damage?

We have recently received a fair amount of inquiries from homeowners who have reported a sinkhole claim, have had the property tested, have been told by the engineering firm that sinkhole activity is present at their property, but they are still waiting for their insurance company to decide if they will be covering the loss.

How to know what insurance will cover

It is often difficult for people to understand why a report discovering sinkhole activity does not automatically qualify them for the sinkhole insurance benefits in their policy. As we have discussed previously, there are many reasons why an insurance company can deny sinkhole coverage such as misrepresentations on applications or prior damages.

If you have had your home tested and instead of issuing payments, your insurance company demands you provide a truckload of documents such as home inspection reports, mortgage information, seller disclosure forms or photographs, be cautious. This most likely means your sinkhole insurance carrier is looking for alternative ways to deny your claim and get out of paying you benefits.

When to be skeptical if your insurance carrier

This is a slippery slope and sometimes a homeowner’s honesty and willingness to cooperate can be used against them. Of course, you do have a duty to cooperate and the insurance company is usually entitled to this information if you have it.

It may be smart to keep in perspective what the insurance company plans to do with this information. If you’re ever unsure about what the information you’re being asked for has to do with your claim, contact an attorney. While you will not be paid unless you cooperate fully, you are not obligated to answer every question, and having an attorney on your side can help keep your claim on track.

Read our tips on filling out a sinkhole claim.

Have a burning question you’d like to ask about sinkholes? Let us know.

Finding Sinkholes

Sinkhole Inspection Cost: The Caveat

Sinkhole inspection cost

If you’re under the impression that your home may be expressing symptoms of a sinkhole, the first thing you’ll do (after filing an insurance claim, of course) is get an inspection. Assuming you have general sinkhole coverage and these repairs will be covered by insurance, the sinkhole inspection cost isn’t something you should be concerned about. What you may question is which engineering firm your insurance company hires.

Insurance companies & engineering firms

While your average sinkhole inspection cost will run the average homeowner a couple hundred dollars, general sinkhole coverage in a  homeowner’s insurance policy will cover this fee. Generally, insurance companies use a small group of engineering firms to independently determine if sinkhole activity is the problem.

Likewise, most of these engineering firms work exclusively with insurance companies just because evaluations are expensive. While you are welcome to contact the engineering firm of your choice and request a quote, many will direct you to your insurance company. How you proceed is up to you; you may want to choose your own engineering firm, but double check your policy and contact your insurance company to confirm that they will accept an inspection from an engineering company outside their network.

Why you may worry about your insurance company’s choice

As with any professional group, you may or may not agree with the results of an inspection. While engineering firms generally try their best to remain unbiased and simply report any signs of a sinkhole they come across, it doesn’t always work that way, and when you’re not working directly with the engineers yourself, you may not feel comfortable trusting them to do their job.

While biases can go to both sides – either being more generous or conservative about the extent of any damage they find – it should bring you comfort to know that these companies are rewarded for less biased results. While you may think that engineers would want to keep the insurance company, the entity that employs them, happy and would, therefore, hold a bias towards them, realize that insurance companies that do not acknowledge obvious sinkhole damage get sued, and those lawsuits turn insurance companies to their engineers.

Therefore, inspecting sinkhole activity with a bias towards either side results in consequences for the engineering firms themselves.

Communicate with your insurance company

Your insurance company likely employs a network of these engineers, so be sure to communicate with your insurance adjuster to find a firm you feel comfortable working with. If your insurance company pushes back on this and insists you take on an engineer that you are not comfortable with, do not take this lately. This is your home, your claim, and your life – if you don’t feel comfortable, contact an attorney!

If you need help searching for an engineering firm that you feel comfortable with, we have a list of firms that we confidently recommend. Feel free to contact us for more information.

Insurance Policies and Coverage Issues

Have You Checked Your Insurance Policy for Sinkhole Coverage?

When a sinkhole occurs

Any unexpected and dramatic sinkhole damages to your home can be shocking and devastating. A homeowner can be overwhelmed with the multiple issues that arise from the startling and unanticipated effects of sinkhole activity producing property damage to your residence. Most homeowners wonder why such events are happening and what they should do next in these unfortunate situations.

The foremost concern of homeowners who have experienced sinkhole loss should be the safety of their families and being sure there is no risk of imminent harm due to a collapse of the surface soils. If there is any risk of a collapse of the ground around your home, you should immediately evacuate, and then contact the local authorities to secure the property.

What to learn from new sinkholes

Recently, several sinkholes have appeared in Tampa Bay, providing a clear reminder that homeowners need to review their home insurance policies in order to verify they are properly covered for sinkhole damages.

On January 1, 2010, a new law took effect that allows insurance companies to drop sinkhole insurance coverage on policy renewals in Pasco and Hernando counties. All policies will continue to provide coverage for catastrophic ground cover collapse, which applies to extensive sinkhole damages that leave the home in an uninhabitable condition.

If you do have an endorsement for sinkhole loss coverage, you should immediately contact your insurance agent or insurance company to report the claim.

What you should expect

Generally speaking, the claims adjustment and investigation process are slow. Unless you are unlucky enough to have your entire home (or a good portion of it) suffer extensive sinkhole damage, your insurance carrier will likely not be in any hurry to respond to a claim or, for that matter, rush out to visit your home to perform the initial investigation.

Only the appropriately trained and educated professionals (geologists, geotechnical engineers, and engineers) are able to determine if damage to your home is caused by sinkhole conditions.

The professionals are hired by your insurer, and then these experts contact the homeowner to schedule a date for testing at your property. Once the appropriate tests occur and the data is collected, the expert report is prepared that provides an opinion on whether or not sinkhole conditions are the cause of the damages to the home. After that, your insurance carrier should advise you whether or not you have a covered loss.

Finding Sinkholes, Insurance Policies and Coverage Issues

Sinkhole Repairs and Policy Limits

When your insurance policy doesn’t cover your repairs

Question: My insurance company confirmed sinkhole activity but is telling me I have to sign the contract for repairs. But my contractor is telling me the costs of the sinkhole repair may exceed the limits of my insurance policy. Help!

Once your insurance company has determined that the damage to your home was caused by sinkhole activity, the insurance company must pay for stabilization of the ground and repair of the foundation of your house, as well as repair of the actual damage to your house (for example, cracks in your walls and ceiling).

However, the insurance company may withhold payment for building stabilization or foundation repairs until you sign a contract to have that work performed.

What will happen

This means that generally after a sinkhole loss is confirmed, the insurance company will issue a check to cover the cost of the cosmetic damage to the home. The company will typically send a letter with this check advising you to obtain at least two bids for the subsurface stabilization work from contractors who perform such projects.

When you provide a signed contract for the subsurface stabilization work, the insurance company will pay for that work as the work is performed and the expenses are incurred.

What your insurance company must do

The insurance company may not require you to pay in advance for subsurface stabilization. And, most significantly, if repairs have begun and the engineer selected or approved by the insurance company determines that the repairs cannot be completed within the policy limits, the insurance company must do one of two things:

  1. either pay to complete the engineer’s recommended sinkhole repair or;
  2.  pay you the policy limits without a reduction for the repair expenses incurred.

Therefore, you can rest assured that even if your insurance policy does not cover the number that the engineer has come to, you will not be left with a house you are unable to live in.

Repairing Sinkholes

Selling a Sinkhole Repaired Home

Selling a sinkhole repaired home

In the event that you’re selling a sinkhole repaired home, you’re likely worried about how to approach the fact that the property does have a history of sinkholes without scaring off the buyer or having to settle for less than the property is actually worth. So how do you disclose all the known information about your home in an ethical way, yet also seal the deal with your buyer?

Be clear that you’re selling a sinkhole repaired home

Above all else, you are obligated to disclose this information to your buyer. While there are fine lines to this rule, it’s advised that you be careful about what information you withhold from your buyer, as you don’t want to deal with a future lawsuit.

Your obligation

The fine print about your obligation to disclose information about your sinkhole is that you need to share the information that is not available through other means. For example, if you are in the possession of a repair report that is not made publicly available for confidentiality, you must send your buyer a copy of this report before selling a sinkhole repaired home.

However, if you do not have any documentation that is legally only available to you, you could potentially argue that the buyer could have gone to the building department to pull any construction permits, all of which would have provided them the history of your home. While you would technically be acting within the law if you do not disclose the knowledge that your property has been affected by a sinkhole, I would advise you be careful about a lawsuit if any repairs failed or another sinkhole opened in the future.

Seller’s disclosure statement

Another situation you are likely to be faced with is a seller’s disclosure statement. Most homebuyers require sellers to complete this statement, which asks specifically about repairs done to the home. If you are asked point blank about any past repairs, and you either state or imply that there is no history of sinkholes only for these repairs to appear down the road, you will find yourself in a sticky legal situation in which you have, point blank, lied on a legal document.

If you’re selling a repaired sinkhole home and state that there is no history of sinkhole repairs on a seller’s disclosure statement, you cannot state that that information was public record.

The best approach

While it may be scary to share this information, there is a way to go about selling a repaired sinkhole home without giving your buyer cold feet. A great way to inform your buyer without scaring them off is to provide them with a copy of the original report provided by the engineering firm that repaired your home and certified the repair as complete. This way, you are not only being upfront and transparent about the quality of your home, but you are also providing them a reason to be confident that they will not be faced with another related issue.

However, if you never completed the repair, this does put you in a more difficult position, as a sinkhole that has never repaired is likely to get worse over time, sinking the property value of your home. If you do not feel comfortable disclosing this information, you may want to simply sell your home “as is”. When you choose this route, you are not required to submit any documentation or prove the property value of your home. You will have to drop the sale price significantly, but you will not be obligated to discuss your sinkhole.

Insurance Policies and Coverage Issues

Role of the Neutral Evaluation Program in Sinkhole Claims

What appeal options do I have if I disagree with the findings of my home insurance company

Following the completion of a sinkhole investigation, your home insurance company will provide you with a copy of the engineering report regarding the findings and conclusion as to whether there is a sinkhole in your yard. Sometimes you will be happy if the answer is “no sink hole,” especially when the actual damage is minor. Oftentimes, however, when you have significant damage or other reasons why you filed the claim (e.g. neighbor has a sinkhole), you may disagree with the findings made by your home insurance company. (Read my tips on filing a sinkhole claim with your home insurance company.)

What Is an NEP, and how can my home insurance company challenge it?

Under a new law passed about two years ago, there is a process called a “neutral evaluation program (NEP).” Under this program, the State appoints a “neutral” party to examine the information provided by your home insurance company so that they can determine the accuracy of their findings. After the neutral evaluator does an investigation, s/he will issue a report, either agreeing with the home insurance company’s conclusions (if that is the source of the dispute) or commenting on the repair recommended by the insurance company (if the dispute is over the method of repair, most often underpinning or grouting).

The part that is most important about the NEP is that the findings of the neutral evaluation can be used against you later. For example, home insurance companies will often bring the engineer to the NEP, who they will pay to argue their position to the neutral evaluator. If the neutral evaluator is persuaded to keep the original opinion asserted by the home insurance company, the report of the neutral evaluation can be used later in a trial. This is very damaging to your claim, obviously, because they will be able to suggest that the neutral evaluator was a disinterested party. Most of the time, however, the engineers or geologists selected are working extensively with the home insurance companies, who pay for the vast majority of these sinkhole investigations. So, they are hardly neutral.

How We Can Help

We are able to assist clients three ways:

  1. Appearing at the neutral evaluation hearing with the home insurance company on their behalf
  2. Providing guidance on whether to object to particular neutrals, who are on the State approved list
  3. Providing the persuasive arguments at the hearing, so that we have a great opportunity to obtain a neutral report in your favor.

A lot of cases get settled because of these reports, in the insureds’ favors and sometimes not, so if you are facing one of these, move cautiously.

Have a burning question you’d like to ask about sinkholes? Let us know.