Tag Archives: Sinkhole Repairs

Your Insurance Company’s Responsibility in Fixing Sinkholes

My insurance company confirmed that I have a sinkhole. Now what?

Sinkhole claims are never simple, even when the insurance company agrees that the damages are caused by sinkhole activity and are, therefore, covered under your homeowner’s insurance policy. There might be fine lines between what you think your insurance company should cover and what they actually cover.

Therefore, it’s important that you understand exactly what insurance companies are obligated to do so that you can be prepared for the development of your insurance claim.

Pertinent sinkhole laws

If a sinkhole loss is verified, Section 627.707(5)(a) of the Florida Statutes requires the insurance company to “pay to stabilize the land and building and repair the foundation in accordance with the recommendations of the professional engineer in consultation with the policyholder, subject to the coverage and terms of the policy.” The insurance company is also responsible to “pay for other repairs to the structure and contents in accordance with the terms of the policy.”

Furthermore, Section 627.707(5)(b) provides that “the insurer may limit its payment to the actual cash value of the sinkhole loss, not including underpinning or grouting or any other repair technique performed below the existing foundation of the building, until the policyholder enters into a contract for the performance of building stabilization or foundation repairs.”

In layman’s terms

From these laws, one can see why there may be a disagreement. Your insurance company employs their own engineers to assess what repairs need to be done on your home, whether or not you think they’re right or not. Therefore, your insurance company isn’t required to listen to your opinion – they are required to follow their hired professional.

Further, they’re not necessarily required to pay for the repairs until you’ve signed a contract with them; if you don’t agree with their assessment, you might not be able to get your home fixed.

Where disputes arise

Under all policies providing sinkhole coverage, you are entitled to be paid for the costs for the subsurface as well as the cosmetic or structural damage. Disputes arise over, first, how the sinkhole should be fixed – whether with grout, underpinning, or both.

The other common area of dispute is whether the insurance company can repair the damage or replace the part of the home damaged. This difference is referred to as “actual cash value” versus “replacement cost.”

Other options for insurance coverage

If you’re left in a situation in which your home is pronounced unhabitable until the sinkhole damage is fixed. don’t forget to get paid for your living expenses while you live elsewhere.  You can even be paid for food expenses and other extra bills that you need to pay as a result of your sinkhole. Learn more about how to be reimbursed for living expenses.

Sinkhole Repairs Cost Hillsborough County Millions

Cold snap causes sinkholes

During the recent cold snap, Plant City and its surrounding area were hit with a rash of cover-collapse sinkholes. These were discovered not simply in the residential areas but also in the interstate infrastructure along the highways.

In some Hillsborough County areas, thousands of cubic yards of grout were installed beneath highways and other buildings to stabilize them.

How these sinkholes affect infrastructure

As reported in the Tampa Tribune, last year Hillsborough County was responsible for fixing a total of eight sinkholes for the year, while this year they have already remediated 12. This requires costly sinkhole repair methods and disrupts the county’s already overburdened highways.

As these events rarely happen in isolation, it would be reasonable to expect an increase in the number of confirmed sinkholes in the area. Therefore, nearby residents should keep their eye out for any changes in their home that mimic the symptoms of a sinkhole.

Signs to look for in your home

Be wary for signs that the ground underneath your home is shifting, causing a lack of balance in your foundation. This may appear as cracks in the wall shaped like a stairway, door frames that no longer hang straight, or any other peculiar cracks in the home.

Other signs can be observed outside, like new depressions in the ground, rainwater that remains above the ground, puddles, and even cracks in the ground around your home.

Finally, speak with your neighbors. Sinkholes often aren’t a one-time occurrence; when a sinkhole appears in a nearby home, it raises the chances of your home being affected. Therefore, keep an eye out for not only your home but the homes in your surrounding neighborhood, as well.

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.

Sinkhole Claims and Home Insurance Coverage Increases

My insurance policy renews next month, but I’m considering filing a sinkhole claim. Should I wait and see how much more coverage I have?

This is probably not necessary, but you will want to read your policy. Most of the time insurance policies have a gradual inflation component to them that increases the available coverage over the year they are in place. For example, if you had $100,000 of coverage at the beginning of the policy period and the next renewal increases you to $120,000, it is likely you are almost at that amount anyway. The amount of coverage available to you under many policies will be more than the amount you had on day one of the policy. But, again, you will want to ask your insurance company or call your agent.

For sinkhole claims, as with many claims, the damage drives the home insurance coverage. This is often called the “manifestation of injury.” Thus, you would look to when the loss for sinkhole damage manifested itself. If it was in the last year’s policy period, you are likely subject to those terms. Some people try and play games with this, and we generally recommend against that. As with most things, honesty remains the best “policy.”

There are usually other portions of your policy that increase your coverage under particular circumstances. Make sure you have a complete understanding of your policy because these “supplemental” coverages, as they are called, are usually subject to a lot of conditions. It’s not that these are not important, but you just need to fully understand them.

Read my tips for filing a sinkhole claim.

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

What to Know About Lender Placed Insurance Claims

What are lender placed insurance claims?

Lender placed insurance policies, also known as forced place insurance policies, are policies that are purchased by a mortgage company in the event a borrower does not provide adequate proof that the borrower has secured insurance coverage for the property.  It’s important in this case to be aware that not all insurance policies are the same, and you’ll find out when you attempt to file any lender placed insurance claims. So what’s the difference between this and an insurance policy that a homeowner chose themselves?

Who benefits from a lender placed insurance policy?

If your homeowner’s policy was put in place by your mortgage company, you better believe it is intended to protect their interests. You may be fortunate to get the necessary protections for your own personal life as well, but your needs will not be discussed.

For example, your homeowner’s insurance policy should cover your home for the full amount that your home is worth. This way, if your home is destroyed, your insurance will cover the costs of rebuilding your home to its pre-catastrophe state. However, in the event that you are only covered by a lender-placed policy, your home is likely only covered to the dollar amount of your mortgage, which, unless you just purchased your home, is likely less than the value of the home.

Your mortgage company gets your insurance money, not you

If you’re covered by a lender-placed policy, you are not the primary insured – your mortgage company is. This means that if you submit an insurance claim, your payout will be sent directly to the bank, and they say where that money goes, not you. This settlement may very well go to the repairs they are supposed to cover, but they also may go to paying down the mortgage. If this happens, it’s your responsibility to communicate with the bank to get that money where it’s supposed to go.

Your home is protected, but your property isn’t

Because this type of insurance company is meant strictly to protect your insurance company, anything that does not belong to them will not be protected under your policy. This means the items inside your home are not covered by your homeowner’s insurance policy. If your home suffers a fire and is completely destroyed, you will only be able to recover the loss of the home itself.

This also means that in situations where your home is temporarily uninhabitable (for example, during a sinkhole or any other repairs), the cost of living expenses to house and feed you and your family will not be reimbursed.

Should I even bother filing a claim?

Now that you know what makes a lender-placed policy different from a policy that a homeowner chose, you may wonder where that puts you when it comes to filing a claim. Well, this difference makes filing a sinkhole claim slightly more complicated. However, a lender-placed policy does provide coverage where there may not otherwise be coverage available.

Therefore, even if you may not get the exact coverage you’d like a homeowner with a lender-placed policy should never be deterred from filing necessary lender placed insurance claims.

Sinkhole Remediation Failed – What Now?

Failed sinkhole remediation

If you’ve gone through the process of sinkhole remediation, or you’re still in the middle of it, and symptoms of a sinkhole begin to appear again, you may be concerned, and rightfully so. Your sinkhole coverage policy is only up to a certain amount, and if the repairs haven’t even been completed yet, your insurance company needs to start again from square one. This means a lot of money. So what does this mean for you?

Your insurance policy

The amount of money your insurance company is required to spend on you is limited to the amount that your home is covered for. There is an exception to this rule, however: if you are in the process of sinkhole remediation (meaning an engineer has not yet confirmed that the sinkhole is completely repaired) and it’s determined that more repairs are necessary, your insurance company is likely on the hook for paying for these repairs.

Essentially, once your insurance company chooses an engineering firm to assess the damage and report the repairs needed, they have taken responsibility for the situation. Their ability to close the claim and minimize the flow of money relies on their engineer. Therefore, if the engineer advises that more repairs are needed or else they are not able to sign off on this sinkhole, your insurance company has to step up or else they can’t complete the claim.

Who determines the state of the sinkhole?

The engineer. More often than not, unless you have specifically taken it upon yourself to find your own engineer and come to an agreement that your insurance company will accept them, your insurance company is responsible for employing an engineer to asses the problem.

Therefore, if you come across more damage to your home while the sinkhole is being repaired or before the engineer signs off on it, you need to address this directly with the engineering firm. If you can provide photographic evidence that the damage occurred after the last assessment of your home, you may be able to help your case. However, the engineer’s opinion is the “end all, be all” of your sinkhole claim.

Is my insurance company responsible for failed repairs?

Since 2005, the Florida Legislature has been pushing for homeowners to take money received in sinkhole insurance settlements and use them to repair their homes, as opposed to just taking the cash. Due to this shift in responsibility towards insurance companies to get the job done, rather than have homeowners pay for it themselves, insurance companies are now potentially responsible for failed attempts to stop sinkhole damage.

The amount of responsibility for your insurance company can vary on a case-by-case basis. If you have questions regarding what you can do about your failed sinkhole remediation, please do not hesitate to contact us for a free consultation.

The Failed Sinkhole Repair Attempt

Last year, my insurance company investigated and determined that my house was being impacted by sinkhole activity. Although the sinkhole repair was performed, cracks like the ones previously on my home have reappeared. Now what?

Under Florida law, when an insurance company confirms the presence of sinkhole activity, it must pay repair the home. If the cost of the sinkhole repairs exceeds the amount of your policy limits, which does happen, the insurance company must either pay the actual amount – even if it is above your insurance policy limits – or pay you the limits of the policy and walk away. (Certainly, there are some details in this, but you get the idea.)

If they have started the repair process, they must have determined that they could do the sinkhole repair within the limits. I assume this because you are still insured with them. Now that it appears the damage has returned, you are entitled to file another claim to repair these newly emerged sinkhole damages. The good news for you is that you start at “dollar one” on your coverage, not where you left off. For example, if the cost of the sinkhole repairs was $100,000 and your coverage was $125,000, you start the calculation of how much coverage is available at zero, not $101,000. Some insurance companies mess this up and try to write you a check for $25,000, which is almost always wrong.

If your damages have returned, this is commonly referred to as “failed repair.” A lot of times, engineering firms will investigate and then try and blame the damage on something other than sinkhole activity when they do the second investigation. This is a tenuous legal position for the insurance company and can be defeated with some effort. My suggestion would be to make a written demand to your insurance company and ask that they investigate the damage, much like you did when you filed the original claim.

Read my tips on filling out a sinkhole claim.

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