Tag Archives: Insurance Company Sinkholes

Insurance Policies and Coverage Issues

How Much Personal Info Does My Insurance Need?

The insurance company told me that I was required to produce a copy of my personal financial information at the time I filed my sinkhole claim.  Can they do this?

Under most property insurance policies providing coverage for sinkholes, an insurance company is permitted to request copies of financial information relevant to the claim.

For example, if you had a claim where there was a potential dispute regarding whether you had completed repairs to the home, an insurance company could argue that this information would document whether you actually incurred the expense.  Note, this remains abusive, because they should not ask for bank records, but should instead simply ask you to produce the receipts and other materials.

Document. Document. Document.

Whenever an insurance company makes a request that you find invasive, abusive, or frankly just odd, it is important that you document you concerns in writing.

Describe your concerns, and demand that they tell you why the request is being made.  While they have contract rights to inquire and conduct their investigation of the sinkhole claim, they cannot use these rights in an abusive manner.

Assure the insurance company that you intend to comply with all reasonable requests, but that you are uncomfortable with what they are seeking.  By doing so, you can document your continued cooperation of the claim.  This is important because insurance companies can use any “alleged failure” to provide information as a separate defense of their failure to cooperate.  Keep copies of the letters in your own file, so you can produce these if litigation breaks out.

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

Finding Sinkholes, Insurance Policies and Coverage Issues

When Not to Pay the Sinkhole Testing Cost

What to know about the sinkhole testing cost

If you’re concerned about sinkhole activity in or around your home, you may be considering getting some testing done. Maybe you’re not sure if your insurance will cover it, or even if it’s worth it. Let’s talk about the sinkhole testing cost and when you should or shouldn’t pay it.

How much does sinkhole testing cost?

In a  word: expensive. This number will vary depending on your own situation, but expect a dollar amount in the thousands. Suffice to say, it’s a steep price, and you may want to consider whether or not this testing is the right choice for your home, family, and pocketbook. However, if you feel strongly about getting your home tested for sinkholes, you should know your rights.

Shouldn’t insurance pay to test for sinkholes?

Theoretically, yes. If your home presents the sign of a sinkhole, your insurance company should be obligated to provide testing. However, some insurance companies blur this law and deny your claim based on the lack of structural damage from sinkhole loss. Therefore, you may not get the support you deserve if your home isn’t damaged enough, essentially.

This claim is, of course, absolutely absurd, and insurance companies have been known to lose this argument in court. While insurance companies will sometimes try almost anything to save a few bucks, do not hesitate to contact a lawyer if you do not feel your home insurance policy is being supported.

Forcing your insurance to pay for testing

Now, if your insurance company states that they will not be providing a sinkhole test because your house is not experiencing structural damage, you may be looking at hiring an engineer yourself and footing that several thousand dollar bill, or maybe just heading straight for an attorney.

However, you have one more option: ask. While your insurance company will likely not inform you of this, they must provide sinkhole testing if you request it. As soon as you flip the script and tell them it is your decision that your home is tested for sinkholes, they are obligated to provide you with this service.

If, at the end of the day, your insurance company provides you with a sinkhole test, discovers sinkhole activity, and still denies your claim, contact your attorney. Your insurance benefits should not be reserved just to a “sinkhole loss”, but sinkhole activity as a whole.

Insurance Policies and Coverage Issues, Sinkhole Lawyers

My Insurance Company Claims I Lied On My Application About Sinkholes

Insurance company claims I lied

Question: My insurance company completed an investigation, and reported to me that I have sinkhole activity at my home.  However, they claim they are not going to pay my claim because I “lied” on my application by not telling them that I knew there was a sinkhole (repaired) next door.

I did not know this until after we closed on the house and paid the premium.  Can they do this?

Your insurance company’s stance

Essentially, the insurance company is taking a position that they want to cancel or “rescind” your policy because you failed to provide information that you either knew they wanted or should have known to disclose.

Honestly, in my experience, these defenses are about as thin as they come.  Not a defense I would make when I represented insurance companies.  Here are the issues you are dealing with when an insurance claim asserts what is commonly referred to as an “MMR” defense to your claim, which stands for “material misrepresentation” on the application.

Why?  Because most insurance applications ask you to provide very specific information, such as “are you aware of any sinkhole activity on an adjacent property?”  If you checked “no,” and that was the truth, they have no defense and should pay your claim.

Your next steps

Most of the time, when an insurance company tries to deny a claim such as this, they do this to you after you make the claim with their lawyers in tow.  In essence, the insurance company got your claim, and then, after taking your premiums for as long as they have, decided to really look to see if they wanted to pay you.

Ask them to see your application, as most people have not actually retained a copy of their insurance application.  Engage your insurance agent in the process, by asking for his/her help.

Oftentimes, insurance agents are involved in the application process and can look to clear up these issues.  However, I can tell you that I am currently representing several homeowners who are in your shoes so it may be necessary to retain a sinkhole attorney.

Insurance Policies and Coverage Issues, Repairing Sinkholes

Caught in the Middle between Insurance and Construction Companies

Can you file a claim against a construction company?

Question: We purchased our home from a construction company approximately 4 years ago and started experiencing minor cracking in various places around the home.  When we spoke with our construction company, they told us they only warrantied the damage if it was “structural,” and then only if the damage was severe.

My insurance company suggested I sue the construction company.  What role does my insurance company play in this?

What you should expect

You are entitled to request your insurance company conduct an investigation.  Rather than simply talking to your insurance company, I would suggest you write to them and ask for a sinkhole investigation.

It is common for insureds to get caught between insurance companies and construction companies in these situations.  We frequently see homeowners who battle with the contractors for years (with no success), only to find out the home had actually been built on a sinkhole-prone area.

While this may seem unfair, it is not.  The insurance company can actually sue the construction company in a claim associated with recovering any payments made to you.  This is referred to as “subrogation,” and is a part of the insurance process.

What your insurance company will do

The easiest way to look at this is that you purchased insurance for the new home from your insurance company, and now it is damaged.

The insurance company should investigate and then make a decision about how to proceed with the contractor.  If enough insurance companies pay these claims, they can use their lobby to force tougher building standards, which benefits everyone (tongue in cheek, but you get the idea).

Sometimes the insurance company will deny the claim on defective construction or latent defects, but you may still have coverage under sinkhole when such defects are present.