Tag Archives: Sinkhole Damage

Insurance Policies and Coverage Issues

Selling Your Sinkhole Home

I see advertisements for companies that buy sinkhole homes. Is that a good option for me?

Selling to a sinkhole-distressed investment company is a very good option for some of our clients. Of course, the financial aspect must work out for you, and the numbers must add up. These companies will typically purchase a sinkhole-distressed property that has not been repaired for a significantly low value and then fix it and sell it for a profit.

These companies can be useful in a couple ways: First, they provide homeowners a easy way out of what seems to be an impossible situation. Second, they repair homes that, under most circumstances, would have gone unrepaired. This helps the homeowner as well as the community get back on its feet.

Oftentimes, the devil is in the details. I’d have to know what they want and what they are giving you. Sometimes, the company buying the sinkhole home will require that you assign your insurance claim to them. This may not be good for you. However, it could be the fastest way to resolve it. You also want to make sure that if you have a confirmed sinkhole, the insurance company is not going to give you grief about any additional insurance benefits to which you may be entitled. Be careful on these.

Read my tips on filling out a sinkhole claim.

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

Repairing Sinkholes

How to Handle Recurring Sinkhole Damage

My home had confirmed sinkhole damage about two years ago, which [name withheld] insurance company paid to fix. I am noticing damage again. What do I do now?

You should know that when an insurance company pays to fix sinkhole damage (or “sink hole”), they are responsible for any failure to fix it. It sounds odd, but it’s the way the insurance policies are written. Generally, the law makes the insurance company responsible for sinkhole damage so that they will take all steps necessary to fix it. Otherwise, they could (not saying they would) intentionally underpay you, and when the fix fails, blame you for not doing the right thing to fix it. (Get tips on filing a claim for sinkhole damage.)

I would prepare a letter, detailing the sinkhole damage, and send it to the engineering firm you hired to fix it, along with your insurance agent. They should inspect the property immediately. If they do not, they are not doing what they are required to do. And, remember, it is not your responsibility to explain why the damage is there, as that is the responsibility of the engineering firm. Most times, lawyers representing insurance companies (we should know – we used to represent them) will try and blame the engineering firm, and tell you to take it up with them. No. The sinkhole damage is the responsibility of your insurance company and they should re-inspect.

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

Insurance Policies and Coverage Issues

Difference Between Legal and Scientific Definition of Sinkhole

What exactly is a sinkhole?

The reason the word “sinkhole” is one word is that scientifically, and legally, the real issue is not usually whether something is an actual hole in the ground but whether or not it is being impacted by sinkhole “activity.” Because the most common issue associated with sinkhole activity is whether or not it is covered by insurance, Florida legally decided the definition of sinkhole and what constitutes “sinkhole loss.”

Definition of Sinkhole

You can find the : (b) Sinkhole is defined as a landform created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater. A sinkhole may form by collapse into subterranean voids created by dissolution of limestone or dolostone or by subsidence as these strata are dissolved.

Definition of Sinkhole Loss

Within the world of property insurance, “Sinkhole loss” is defined as structural damage to the building, including the foundation, caused by sinkhole activity (Section 627.706, Florida Statutes).

In layman’s terms, a sinkhole forms when rock beneath ground dissolves. Soil, due to gravity, falls into the holes in the rock. When the soil moves, the surface shifts, damaging the home.

Difference Between Legal and Scientific Definition of Sinkhole

Oftentimes, the reason why insurance company sinkhole investigations reveal “no sinkhole,” while others say “yes sinkhole,” relates to the differences between the legal and scientific definitions. When Florida adopted the sinkhole definition many years ago because it became an insurance issue, the definition was not necessarily lifted from the scientific literature.

Many times, when we retain experts for our clients, who are either disputing how to repair a sinkhole, or whether there is a sinkhole, the problem comes down to how the insurance company defines sinkhole. Most of the time, we are able to get the insurance company to change their position by demonstrating that you can have a sinkhole loss, even if there is not a large, gaping sinkhole in your yard.

Read my tips on how to file a sinkhole claim with your insurance company.

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

Repairing Sinkholes

Mortgage Companies Approach Repairing Sinkholes Differently

I’ve heard that when the insurance company pays you for a sinkhole claim, the mortgage lender makes you repair the home with the money. Is this true?

The answer is simply that it depends on your lender and its policies, the amount and type of damage to your home, and how much you owe on the principle.

Every lender has a different policy, but it is true that a large portion of the lenders will make you use some, or all, of the money to repair the sinkhole damage to your home unless you have enough to pay off the mortgage in full. Other lenders will allow you to put some or all of the money toward your mortgage, but very few lenders will simply allow you to keep the cash for yourself. The lender has just as much of an interest in ensuring that your home’s resale value is protected as you do.

The question you will need to answer for yourself is whether you want to do the repairs or whether you want to try and live with the damage. As some damage by sinkhole activity is less severe, some people do some of the cosmetic sinkhole repairs and leave the subsurface alone. This drives property insurance companies crazy, but that’s their problem – it’s your house and your money. If you want to do the sinkhole repairs, make sure when you submit the payments to the mortgage company that you clearly state your intentions (repair vs. pay down mortgage). Most mortgage companies have two different departments, one for escrowing money for repairs and another for paying down your loan. If the money goes to the wrong department, it can be a huge hassle.

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

Sinkholes in the News

Burden of Proof Placed on Home Insurance Company

If I file a claim, do I have to prove there is a sinkhole in my yard, or does the insurance company have to prove otherwise?

The Second District Court of Appeal (DCA) recently issued an opinion that held that the home insurance company bears the burden of proof in showing that property damage did not result from the presence of sinkholes. In Warfel v. Universal Insurance Co., the homeowner filed a sinkhole claim with his insurance company after noticing damage to the walls and floors in his home. The insurance company completed a geotechnical inspection pursuant to Florida Statutes §627.707 and found property damage was not the result of a sinkhole. As a result, the homeowner sued his insurance company.

Ruling Puts Burden of Proof for Sinkhole Damage on Homeowner

At trial, the homeowner’s insurance company asked the court to instruct the jury that section 90.304 and 627.7073(1)(c), Florida Statutes creates a rebuttable presumption in which the insurance company”s geotechnical report would be presumed correct, and in which the homeowner would be required to show that it was wrong. The insurance company presented expert evidence from the company that completed the geotechnical inspection, and the homeowner presented expert testimony that reviewed these findings but did not conduct his own investigation. Following the presentation of evidence, the trial judge instructed the jury that the homeowner had the burden of proving property damage resulted from a sinkhole, and the jury found in favor of the insurance company.

Appeal Rules Against Insurance Company

On appeal, the Court found that this instruction was improper because the statute did not demonstrate a clear legislative intent to require the homeowner to bear the burden of proof for sinkhole damage. The dissent pointed to other statutory schemes in which the legislature created rebuttable presumptions that shifted the burden of proof without expressly stating so.

Similarly, it found that section 627.707 of the Florida Statutes created uniform geotechnical investigation procedures so as to address the economic challenges of increased filing of sinkhole claims. According to the dissent, the majority approach is illogical because it allows the homeowner to overcome the presumption of correctness given to the insurance company’s geotechnical opinions by obtaining experts to review but not conduct their own independent investigation.

Benefit of Ruling to Homeowners

The holding in Warfel gives homeowners an advantage at trial in sinkhole-related suits. Judges are no longer allowed to instruct jurors as to the presumption of correctness for insurance companies geotechnical reports, even in light of a homeowner”s presentation of conflicting expert testimony.

Read my tips on filing a sinkhole claim.

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

Insurance Policies and Coverage Issues, Repairing Sinkholes

Sinkhole Activity Not Limited to Areas of Florida with Limestone

I mostly hear about sinkhole claims in Pasco and Hernando County. I live in the Miami, Dade County area and have noticed some cracking. But I’ve heard that because there’s not limestone in this area, the cracking can’t be the result of sinkhole activity. Is that true?

I believe what you’re alluding to is the fact that people commonly think of sinkholes as dissolved limestone. In fact, the statutes on sinkhole activity, as defined by the State of Florida, do not necessarily limit sinkhole activity to only the dissolution of limestone. (Learn more about Florida’s legal definition of sinkhole.) The definitions mention other rock and underlying strata. It is true that many parts of South Florida and the Dade County or Miami areas “The creation of new primary schools districts is an excellent example of how the borough council continues to invest in our schools districts and their pupils. do no sit on a true layer of limestone but do sit on other forms of rock, which we believe, if suffering from dissolution, satisfy the definition of a sinkhole.

In fact, the primary reason damage due to sinkhole activity is covered by insurance relates to a large, cover collapse sinkhole that occurred in Winter Park, outside of Orlando. Additionally, of all the clients we currently represent, the largest increase in claims has been in the “less expected” areas, such as Ocala (Marion County) and South Florida. There may not be a scientific explanation for this; it could be that there’s just an increased awareness by the property owners.

The focus should be less on whether your cracking could or couldn’t be attributed to sinkhole activity and more on getting whatever is causing the damage resolved. Under Florida law, an insurance company must not only determine whether it is a sinkhole, but also whether or not there is an alternative cause for the damage (e.g. organic soils, clayey soils, construction defects). You may find yourself in a situation where you are presenting minimal evidence of sinkhole activity, but the claim has to be paid because the engineering firm cannot determine the cause of the damage with any reasonable degree of specificity.

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

Insurance Policies and Coverage Issues

How to Handle Living Expenses in Your Sinkhole Claims

If I have my home repaired for sinkhole damage, can I include the living expenses I incur while the repairs are being done in my sinkhole claim?

After an insurance company confirms a loss has occurred, the repairs to the property then follow. This phase of the sinkhole claim process is lengthy and wrought with obstacles to the insured. Primarily, an insured may have additional living expenses that are incurred due to temporarily vacating the residence during the repair work. Many of our clients cannot afford to continue to pay their monthly bills in addition to the costs of staying in a rental home or hotel during the completion of the repair work at their home.

A brief review of an insurance policy will identify whether such additional living expenses are provided, the limits of any such coverage, and how any such expenses will be reimbursed by the insurance company. These costs to the insured that are incidental to the repair work being performed are typically not paid by the insurance company until they are incurred (and not unless the insured demands payment for these covered expenses). In order to substantiate a sinkhole claim, it is important to save all receipts and other supporting documentation of any additional living expenses that may arise during the timeframe the insured is unable to reside in the home due to a covered sinkhole loss.

Read our tips on filling out a sinkhole claim.

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

Repairing Sinkholes

When Expansive Clay Soil Damage Constitutes a Sinkhole Claim

Are there common causes of settlement damage?

During most sinkhole investigations, engineering firms examine the deeper soils as well as the soil material in the shallow areas near the home. Sinkhole activity requires deeper borings, to depths as deep as 100 feet below the surface. The limestone is the primary area of concern, with an examination as to whether the rock is dissolving. At the same time the limestone is being examined, most engineering firms will also do shallow borings, called hand augers, to extract the surface materials for expansive clays or organic material. (Read more about what constitutes a sinkhole.)

Things to Keep in Mind if Expansive Clay Soil Is Found

The issue of expansive clay soils, or “shrink swell” clays is a common distraction for deciding whether a home is being impacted by sinkhole activity. If you or someone you know has been told there is no sinkhole activity and the damage is being caused by expansive clay, here are the most important things to keep in mind:

    1. Even if expansive clay soil was found at the site, this does not mean the home is not being impacted by sinkholes. This is complicated, but it is associated with the manner in which expansive clay and sinkholes are formed.
  1. Many sinkhole investigations are “denied” claims more because they are incomplete, not because they necessarily excluded sinkhole. Thus, while the sinkhole investigation may not be complete, the presence of expansive clay soil often results in a denial of the claim simply because they found clay near the surface.
  2. Lastly, for expansive clay to be the cause of the damage, several things have to be true:
  • It has to be of a particular kind.
  • It must be at a particular depth.
  • It must be of a sufficient percentage of the soil to actually impact the movement of the home.

Suffice to say, we read a lot of engineering reports where the insurance dispute can be found quickly. If we see something we do not fully understand on technical matters such as this litmus test applied to the presence of expansive clay soils, then we can find an appropriate professional who can assist our clients.

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

Finding Sinkholes, Insurance Policies and Coverage Issues

How Does Sinkhole Damage Differ from Hurricane Storm Damage?

My home was damaged during the ugly storm season of 2004, by the wind.  We never did file a claim.  Now, we see damage that looks more likely to be settlement.  How does sinkhole damage differ from that caused by hurricane and other storm damage?

Storm damage and sinkhole damage presents in entirely different ways.  Storm damage is often referred to as impact damage because the damage is causing the walls to move or to suffer impact from the increase flow of air.

Additionally, homes can be damaged in storms due to the impact of debris upon the home, damaging windows as well as walls.  Conversely, settlement damage caused by sinkhole settlement results from a loss of support the home when the foundation sinks or moves unevenly.

Can You See Stair Steps?

Sinkhole damage usually appears in a stair step pattern, as opposed to the diagonal but straight damage lines caused by storms.  The stair step damage of sinkholes so tends to follow the mortar joints of the walls, while storm damage tends to ignore these boundaries and can even caused damage to the bricks and mortar themselves.

Overall, because a named storm enters your area, it is always a good idea to conduct an exterior audit of your home,  to determine if any damage is present.  Use of digital and video cameras programmed with the dateline code and time will help provide proactive documentation.  That way, if there is a storm, you can document that the damage to the home was not present when the storm hit.

Whether a storm is the cause of the damage or whether it is a sinkhole is important because these two losses are paid in different ways, and may be subject to different deductibles.  For example, sinkhole losses have a flat, predetermined amount ($500, $1,000), while hurricanes have a percentage of the total insurance coverage available (e.g. 1 percent, 5 percent).

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

Repairing Sinkholes

Does Homeowner’s Insurance Cover Sinkholes?

Does homeowner’s insurance cover sinkholes?

Many homeowners look to their home insurance to fix every problem that occurs. Unfortunately, this is sometimes not the case and depends on your own insurance policy and your level of coverage. For example, if you elected only for catastrophic sinkhole coverage, your insurance will only be there for you if the damage is so bad, your home is condemned. That being said, what should you expect from your insurance? Does homeowner’s insurance cover sinkholes?

What is standard sinkhole coverage?

It is highly recommended that you spring for standard sinkhole coverage; though it’s pricier, and you may not think you’ll ever need sinkhole insurance, sinkholes are not easy to predict and even more difficult to pay for repairs.

If you did opt for standard sinkhole coverage, your insurance policy will cover the cost to stabilize the land and the foundation of your home. On top of that, they must also pay you the cost of any cosmetic damages resulting from the sinkhole.

The grouting loophole

Does homeowner’s insurance cover sinkholes? Well, yes, but always be aware that insurance companies are in the business to make money, and will take advantage of you if you allow them to.

One common loophole is the manner in which your land and your home are repaired. Insurance companies will usually pay to grout the soil, which is essentially one of the only ways to stabilize it. To grout the soil, a cement-based material is injected around the perimeter of the home and to an appropriate depth beneath it.

While this may sound great, this is not an appropriate repair, and your home will likely fail in the future. This is because while some areas have been stabilized, the upper 10 to 15 feet of your soil are likely unaffected by grout, leaving your home susceptible to another sinkhole. To fix this problem, the appropriate repair is underpinning, which connects your home to the ground with poles. While the right choice, this is expensive, so your insurance company is likely to avoid this route if possible.

The cosmetic damage loophole

Lastly, the insurance company must pay for the cosmetic damages to the home. This usually includes the cracking to the interior and exterior, as well as to the floors and the foundation itself.  To be exact, your insurance company is obligated to pay what is required to bring your home back to its pre-sinkhole state.

It is important that you do not receive this check until the repairs are completed because any of these cracks are not visible until the repairs are completed. If you receive payment before anything is fixed, it may feel nice to get some money to help out with your sinkhole repairs, but it is impossible for your insurance company to accurately assess how expensive repairs will be until all the damage is made clear.