|Q: I am in agreement that the “Sinkhole Survey” inspections are an underhanded (and illegal) tactic to reduce their liability.
FS 627.706(1)(b) states that the “…insurer shall make available, for an appropriate additional premium, coverage for sinkhole losses on any structure.” It goes on to say that the insurer can inspect the property prior to issuing coverage, but it gives no latitude for them to completely deny coverage.
What they are doing is being lazy and denying coverage completely, rather than calculating the appropriate premium increase based on risk.
Where are the lawyers regarding this matter? I’m not hearing much.
This is a good question and brings an interesting take on the prior post we did on this topic. Have insurance companies found that it is simply easier to deny the sinkhole endorsement than trying to calculate the risk of providing the coverage? Sinkhole coverage is a huge risk for insurance companies, I don’t think anyone would question that. Sinkholes are everywhere and can be costly to repair. The number if sinkhole claims had been on the rise the past several years not necessarily because more sinkholes were occurring but because the awareness of the issues and problems had increased to the point that homeowners are much more cognizant and educated now. The combination of those factors does make sinkhole coverage risky. But aren’t you in the risk business? To be a successful company don’t you need to be able to properly calculate risk. That is comparable to my firm only accepting cases that were slam dunk winners or on the other end, accepting every single case that was brought to me. We have to calculate the risk of accepting files and that skill makes a successful law firm. I agree with the above post and comment and think that insurance companies have become lazy and in general, would just rather not deal with sinkhole coverage at all. We did see an attempt to make the coverage go away in the legislative session last year. My feelings are once the sinkhole phenomenon runs it course and we go another five years with no hurricanes, insurance companies will open up more and start freely writing the coverage again. Either that or the legislature will do away with the coverage altogether.