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:
- either pay to complete the engineer’s recommended sinkhole repair or;
- 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.
