Sinkhole damage to homes has increased substantially in recent years, especially in the state of Florida. Until recently, sinkhole damage was covered under most homeowner’s insurance policies. Due to the increase in the frequency of sinkhole claims, many homeowners’ insurance companies have begun to separate sinkhole coverage from the coverage available with a standard policy.
A sinkhole occurs when underground materials give way and the surface cover of an area collapses. The erosion of the underground material can be gradual or sudden, and can be caused by a number of different factors. Some sinkholes are caused by natural catalysts, while others may be influenced by the activity of people.
Florida ground is made up of limestone and dolomite, both of which dissolve when exposed to acidic conditions. Long term exposure to acid rain may weaken the stability of these materials underneath the ground and contribute to the formation of a sinkhole. Heat is also a contributing factor in weakening the stability of underground materials.
While the frequency with which sinkhole claims are filed has undoubtedly increased, it is difficult to ascertain whether the actual occurrence of sinkholes has increased. The development of land which is susceptible to sinkholes has increased, so it is more likely that a sinkhole will cause property damage now than in the past. Information about recent sinkholes is also much more readily available, which can contribute to the perception that sinkholes are occurring more often.
Homeowners should be aware of changing sinkhole policies when purchasing homeowners insurance, and should ask about whether sinkhole damage is covered. Homeowner’s insurance companies are not required to cover sinkhole damage in some states. Many homeowners do not realize that sinkhole damage is not covered until after a claim has been denied. This can cause financial hardship and make sinkhole damage difficult to repair.
Florida Homeowner’s Insurance
In 2011, Florida Governor Rick Scott passed legislation that allows insurance companies to separate sinkhole insurance from standard homeowner’s insurance policies. The law also allows companies to limit coverage to damage affecting the main building and exclude swimming pools, sidewalks, and grounds. This legislation was designed to assist Florida homeowner’s insurance companies, as many companies had been adversely affected by the rising costs of sinkhole damage. The law also makes it possible for companies to lower the costs of a standard homeowner’s insurance package, though it may foster confusion regarding coverage.
If sinkhole damage is included or has been purchased separately, homeowners often fail to realize the specifications of the policy. Sinkhole policies may require the home owner to cover percentages of the initial cost of repairs prior to meeting claims or may specify items and property that is not covered. Home owners should be sure that all aspects of a policy are understood prior to purchasing sinkhole or homeowner’s insurance coverage.
Varying Sinkhole Definitions
If a ground cover collapse has been caused by collapsing clay or stems from human activity such as abandoned mines, the damage may not fit the insurance company’s definition of sinkhole damage. It is important that home owners are wary of differences in definition such as this that may cause a claim denial. If a homeowner has any questions regarding the sinkhole definition in a policy, the home owner should communicate with insurance representatives to make sure that the definition is understood and agreed upon prior to purchasing the insurance policy.
Sinkhole Claims Denial
If a sinkhole claim is denied or a lower amount than expected is paid out by the insurance company, home owners have the right to appeal the decision. If the home owner feels that the insurance company has been intentionally misleading or that the decision is contradictory to the terms of the policy, it may be in the home owner’s best interest to hire an attorney. Insurance companies will often respond more quickly are favorably to a home owner that has hired an attorney to help overturn a claim denial.
“Florida Gov. Scott Signs Property Insurance Cost Control Bill.” Insurance Journal News. Wells Media Group, 17 May 2011. Web. 1 June 2014. <http://www.insurancejournal.com/news/southeast/2011/05/17/198940.htm>
“The Florida Senate.” Chapter 627 Section 706. State of Florida, 1 Jan. 2012. Web. 1 June 2014. <http://www.flsenate.gov/laws/statutes/2012/627.706>
“Sinkholes.” USGS Water-Science School. USA.gov, 17 Mar. 2014. Web. 1 June 2014. <http://water.usgs.gov/edu/sinkholes.html>