Tag Archives: sinkhole insurance

Insurance Companies and Denial of Insurance Coverage

My insurance company is asking me to tell them when the damage “first appeared.”  I really do not know, and am not sure if some damages I previously thought were “normal” are sinkhole damage.  Thoughts on this?

We have touched on this issue in prior posts but it seems to have become such an issue that we feel the need to detail this trend in a separate post.

Let this also serve in a way as a warning to homeowners involved in a sinkhole claim.

When a sinkhole claim is filed one of the first steps is for an adjuster from the carrier to come out and inspect the damage. During this initial inspection these adjusters almost always request that the homeowner submit to a recorded statement. We say that the carrier requests the statement but in reality, you are required to cooperate with any reasonable investigation or your insurance company could deny you coverage, so you are really forced to provide a statement.

During the course of these recorded statements, the adjusters often ask when the homeowner first noticed any cracks. This question has characteristically been innocent but, now it seems to take on a different role. Many adjusters are now influencing the homeowner to identify the first sign of cracking they ever noticed and then using the homeowners own words, the adjuster will unilaterally assign the date of the loss in the year the homeowner first saw even a semblance of a crack. We have even heard homeowners say their adjuster refused to continue adjusting the loss until they provided a date.

Several Serious Issues Arise

First, the limits on a homeowner’s insurance policy almost always increase as the years go by. Your policy limits now may be tens of thousands of dollars more than what your limits were several years ago. If the adjuster assigns your date of loss to a date several years ago, the carrier will only pay you the amount of your policy limits back then, precluding you from collecting on thousands of dollars you may need to repair your property.

Second, by assigning the date of loss to a date years ago, this limits the amount of time a homeowner has to file a lawsuit. As with any civil action, there is a time limit on how long a homeowner has to sue their carrier. A date of loss many years ago may automatically preclude you from filing a lawsuit if something goes wrong and it gives your carrier even more incentive to delay the claim to preclude you from suing them.

Read our tips on filing a sinkhole claim.

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

Sinkhole Damage Diminishes Home Values

What can I do about the lost value of my sinkhole home?

Unfortunately, insurance policies and Florida law do not allow for recovery of loss of value to your property. This is an extraneous consequence of having a sinkhole claim that insurance contracts and insurance companies do not take into consideration.

This is a cold business with a cold approach. Insurance companies do not take human factors such as diminution of value of the home, inability to find insurance again or time missed from work to be present for the numerous inspections into account. These are things that you will not recover under the contract. These are things that we hope juries pick up on and take into account when determining the damages to a homeowner.

Repairing a sinkhole home does significantly increase the value of the home but, is unlikely to recoup 100%. The good news is that as sinkholes become a more integral and accepted risks of homeownership in Florida, buyers seem to be a little less bothered by the sinkhole stigma as in years past. Keep in mind that there may be some additional coverages or damages that can be payable for over charged premiums or the cost to move out in some circumstances, so there may be a light at the end of the tunnel for certain homeowners.

Read our tips on filling out a sinkhole claim.

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

Florida Sinkhole Claims on the Rise

An interesting article posted on TBO.com indicates what most of us know: that sinkhole claims are on the rise. The legislature seems to have caught on to this (probably through insurance lobbyists) and wants to evaluate where and why these claims are on the rise. We do see a common theme in this article which is that sinkhole alley  resides in Hernando, Pasco and Citrus Counties and surprise that claims in other areas of the state are becoming more common.

As we have discussed many times before, areas such as Ocala, Gainesville, The Villages, Hillsborough and Pinellas Counties are equally at risk, just not as highly publicized. It is also interesting how the article discusses the difficulty they expect to have in mapping sinkhole locations due to poor and spotty records keeping systems over the years.

Finally, you see several hints from certain interviewees that fraudulent sinkhole claims are on the rise. We wonder, if you have damage that looks like it could be related to sinkhole activity such as cracks or depressions in the yard, how can you be blamed for filing a claim and getting some piece of mind? This is especially true considering the trend for carriers today, is to drop or carve out sinkhole coverage for Florida homeowners.

Read our tips on filling out a sinkhole claim.

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

Ocala Homeowners Could Be Gambling with Sinkhole Coverage

Double-check your sinkhole insurance coverage

Attorney Morgan Barfield of the Barfield Law Group recently provided an in-depth interview to a local Ocala newspaper, the Star Banner.  You can read the full article in the insert below.

The article focused primarily on the changes in sinkhole laws the past several years and how sinkhole insurance coverage is no longer mandatory but now is an optional coverage. The article encourages homeowners to not take the less expensive road and run the risk of homeownership in Florida (especially Ocala) without sinkhole coverage.

“This is a good warning to not only Ocala residents but all homeowners in Florida who live in a high risk area for sinkhole damage”, stated attorney Morgan Barfield in a follow up interview.

Many Ocala residents are still surprised to hear about the large scale sinkhole activity in their area and are not aware that the laws have changed or their own policies have been modified to comply with the new laws.

Barfield Law Group encourages each homeowner to review their current sinkhole policy and make sure it is up to date with the coverage best to protect their home investment.

Be informed of what catastrophic coverage is

As we have written many times, it is of crucial importance that homeowners be up-to-date on the quality of their sinkhole coverage, lest their policy be reduced only to catastrophic coverage without their consent.

When this occurs, one’s insurance policy is only required to foot the bill if they judge your home as unhabitable; if this is not the case, you are left on your own to deal with the effects of your sinkhole, when it comes to both your safety of your family and the property value of your home.

Is Catastrophic Ground Cover Collapse Coverage Enough?

What is catastrophic ground cover collapse coverage?

When it comes to sinkhole coverage from your insurance policy, you may be tempted to elect for catastrophic ground cover collapse coverage, as opposed to general sinkhole coverage (which tacks more money onto your premium). The difference between the two is simple: with catastrophic ground cover collapse coverage, you will only be covered by insurance if your home is left unhabitable by a sinkhole opening below your home.

Why this matters to you

While this may not matter to the uneducated homeowner, those who want to protect their home need to be aware. Sometimes, before a sinkhole opens and swallows your home and your family (sometimes literally), your home may express physical symptoms of the ground shifting underneath it.

For example, you may find cracks in the foundation of your home, the walls may be separating from the ceiling, rainwater isn’t draining well from your yard, or a variety of other signs may present themselves. While these symptoms qualify as major damage to your home and are obvious signs of a sinkhole, you will not be covered by your insurance if you do not have the correct coverage; if the ground has not collapsed underneath your home, your catastrophic coverage will not help you repair the foundation of your home affected by a sinkhole!

So catastrophic ground cover collapse coverage will cover an open sinkhole?

Not necessarily. Not all open sinkholes qualify as a catastrophic situation – that’s not the definition, so don’t be caught unawares! Catastrophic means that the house is not able to be lived in safely. So, for example, if a large sinkhole opens in your yard, swallowing your car and driveway, your insurance may not cover your repairs. Your insurance company may very well see that the vast majority of your home is safely on the ground and wave you off.

Therefore, I cannot reiterate enough the importance of having general sinkhole coverage. This can result in a dangerous situation for you and your family, plus put you hundreds of thousands of dollars in debt for necessary repairs.

Stay on top of your payments

Even if you do opt for general sinkhole coverage, be wary that if you fail to pay your premium on time, your insurance company may revoke your general sinkhole coverage and only provide catastrophic coverage.

Do I Need Sinkhole Coverage in Florida?

Do I need sinkhole coverage in Florida?

Yes. A thousand times yes. Sinkhole coverage is incredibly important in Florida; while you may not like paying extra on your insurance premiums, a sinkhole can open up beneath your home at any minute, seemingly out of nowhere. The more appropriate question you should be asking is “why do I need sinkhole coverage in Florida?”

What causes sinkholes?

To understand the answer to this question, we must understand what sinkholes are and what causes them. In layman’s terms, sinkholes are holes in the ground that can open up anywhere at any time, and can swallow entire neighborhoods in an instant.

Sinkholes are caused by water stuck underground with no escape route to an already formed body of water. They can be caused by both natural rainfall and man-made water flow. Basically, over years and years and through much water, the acid in the water eats away at the soil underneath your home. Eventually, when there is no soil left underground, the top layer buckles without the support of the soil underneath, and creates a sinkhole.

Why are sinkholes more common in Florida?

As one can imagine, this phenomenon is more typical in more porous soils, like limestone, sand, and clay. The texture of this soil provides the acidic water more opportunity to burn through the soil than it would if the earth were a harder type of rock.

The state of Florida happens to be made up of mostly soils like limestone and dolostone, which provide the perfect environment for water to seep in and collapse the surface of the land. The regions of Florida that experience more sinkholes than others can be explained by whether or not the underground limestone is close to the surface; the closer it is, the weaker the earth underneath your home is to support the surface while the limestone underneath slowly disintegrates.

Therefore, your question shouldn’t be “do I need sinkhole coverage in Florida”, but “is my home in a region with many sinkholes?”. Before purchasing a home, it is in your best interest to consult geological records of your home and the surrounding neighborhood. If there is a history of sinkholes in your neighborhood, there is a good chance you’ll be faced with a sinkhole, as well.