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.