We are pleased to be able to discuss a very important Motion we just won this week. The arguments were heard by Judge Rushing in Hernando County just a couple days ago. The facts of the case were that a Hernando County homeowner insured with Homewise submitted a claim for sinkhole damages. Homewise tested the property and their own expert concluded that there was sinkhole activity present but, that the damage to the home did not reach a level where it could be considered “structural”.
We have discussed this issue at length in other posts but as a refresher, three insurance companies in Florida, Homewise, USAA and Sunshine State, make the argument that the definition of a “sinkhole loss” in Florida Statutes requires the home to exhibit “structural damage” before the claim is payable. Therefore, numerous (we believe possibly as many as 200) homeowners have had their claims denied even though sinkhole activity was found at their property.
The problem Homewise faced was a simple one and one that could easily have been corrected. Nearly every Homewise insurance policy contains a form which allows homeowners to select or reject whether their policy contains sinkhole loss coverage. That form provides homeowners with an understanding of what sinkhole loss coverage means and in that form it describes sinkhole loss coverage as covering any and all “physical damage” to the property caused by sinkhole activity. Yet, when the homeowner receives the sinkhole endorsement it only provides coverage for “structural damage”. Not only does this create a real ambiguity but it is borderline fraudulent. Thankfully, Judge Rushing agreed with our Motion for Summary Judgment and ruled that the ambiguity as to what damage will be covered must be read in a light most favorable to the homeowner. This means Homewise has to accept coverage for any claim that merely exhibits the home has physical damage caused by sinkhole activity. This could potentially flip over a hundred denied sinkhole claims. Now we must include the caveat that the Office of Insurance Regulation has recently expressed interest in the financial stability of Homewise. We do not know what this means at this time but homeowners insured with Homewise need to be aware of this important ruling.