Florida has more sinkholes than any other state; thousands of sinkhole insurance claims are reported here every year. Unfortunately, not all homeowners’ insurance policies provide coverage for damage to your home resulting from sinkholes. Florida law, which defines a “sinkhole” as “a land form created by subsidence of soil, sediment or rock as underlying strata are dissolved by groundwater,” only requires insurance companies to cover “catastrophic ground cover collapse.”
What’s the difference between coverage for sinkholes and coverage for “catastrophic ground cover collapse?” As Miami Property Insurance Lawyers, we have experience with both. As for sinkhole coverage, while all insurance companies licensed in Florida must offer it, the coverage is usually an endorsement to an existing policy and costs an additional premium. Moreover, insurance companies may require a property inspection before extending coverage, and if sinkhole activity is present on the property, or even within a certain distance of the property, the insurer may refuse to provide sinkhole coverage.
If you do not purchase sinkhole coverage, or it is declined, the only coverage you have is for “catastrophic ground coverage collapse.” Importantly, four conditions have to be met before this coverage kicks in. They are:
- Abrupt collapse of the ground cover
- A depression in the ground cover clearly visible to the naked eye
- Structural damage to the building including the foundation; and
- The insured structure is being condemned and ordered to be vacated by the applicable government agency.
All four of these criteria are necessary for coverage. If, for example, you have foundation cracks, but the home is still livable, your insurance company may not pay for the damage.
If You Are Buying a Home in Florida
Our recommendations include checking with local officials about recent sinkhole activity in the area; hiring a home inspector to help you identify signs of potential sinkhole activity and considering sinkhole testing. If you want to purchase sinkhole coverage, make sure the coverage is included in your policy or in a rider.
If You Have a Sinkhole Claim
The first thing to do is to make sure you and your family are safe. Evacuate if necessary. Next, you should notify your insurance company immediately, as well as your city or county building inspection department. It is also important to mark the sinkhole or property with fencing, rope or tape, so as to warn others of the dangerous condition. You could be held responsible if someone is injured on your property as a result.
If you have sinkhole coverage, your insurer will likely perform geological testing that will establish the cause of damage. If testing confirms that a sinkhole was the cause, your policy should pay for the testing and repairs, less any applicable deductibles.
You should know that if your insurer denies your sinkhole claim, or you disagree as to whether damage was caused by a sinkhole or the method of repair, you are entitled – by law – to participate in the Florida Department of Financial Services’ Neutral Evaluation Program.