New Legislation on Sinkholes Could Hurt Property Owners in Florida

September 06, 2012

New Legislation on Sinkholes Could Hurt Property Owners in Florida

Sinkholes are a natural geologic event and fairly common occurrence in Florida. They can range in size from small and shallow depressions to large holes that can consume multiple buildings. The presence of a sudden sinkhole on one's property can lead to a significant amount of damage, and large insurance claims.

According to the Insurance Journal, private insurers reported to the Office of Insurance Regulation that the number of sinkhole property damage claims increased from just over 2,000 in 2006 to well over 6,500 in 2010. The total cost for these claims was almost $1.5 billion.

State officials are concerned the high costs of sinkhole claims are responsible for rising insurance rates. As a result, legislators have attempted to address the large costs associated with sinkhole claims by adjusting the sinkhole insurance statute.

A Bit of Background: Sinkholes Defined

Although a wide range of events can cause damage to homes, sinkholes are a very particular event. A sinkhole is defined by the Southwest Florida Water Management District and the Florida Sinkhole Research Institute as a geologic hazard formed by the dissolution of limestone. This dissolution can result in a collapse causing losses of buildings and damage to property.

Sinkholes are a major concern in Florida since the state is composed mostly of limestone. When precipitation falls through the atmosphere it gathers carbon dioxide and can become slightly acidic. When this acidic rain moves through the ground it dissolves limestone as it passes. As the limestone slowly dissolves, cracks form. If these cracks form above a cavity or aquifer, the limestone may no longer be able to support any structures that rest upon it and could collapse, causing a sinkhole.

There are a handful of warning signs associated with potential sinkholes. For example, if new areas are exposed around a home's foundation or fence posts the ground around them may be sinking due to a potential sinkhole. Also, sudden difficulty closing doors or windows, new ponds of rainfall where water collection was never a problem and cracks in walls, floors or pavement can all be signs that a sinkhole is forming.

What to Do When a Sinkhole Occurs on Your Property

If a sinkhole is suspected, your insurance policy may cover any resulting damages. Every insurance company is required to offer sinkhole coverage. Unfortunately, this coverage is often available for an additional fee. In various counties throughout the state, this premium for coverage can range from just over $20 to almost $1000, depending on the location of the property receiving coverage.

If a sinkhole is present on your property, it is important to contact homeowners insurance. If extensive damage occurs to your house you should also notify your county's Office of Emergency Management.

Unfortunately, insurance companies do not always approve sinkhole claims. A denial could mean a homeowner is unable to repair costly damage caused by this potentially devastating event. Repairs may include stabilizing the land underneath the home and foundation work, both of which can be costly.

Because claims are not always approved, more policyholders may find it necessary to challenge insurance companies to receive the funds that are needed to make these repairs, repairs that are often a part of their coverage. As a result, it is wise to be aware of some recent changes in the laws associated with sinkhole claims.

Changes in Sinkhole Law in Florida

There are a number of changes to the current sinkhole insurance statute. The most prominent changes include the following:
-A two year time limit to report losses associated with sinkhole claims
-Structural damage is now strictly defined

In the original statute, there was not a time limit to report sinkhole claims. The current changes now include a two-year limit, beginning on the date the sinkhole occurred, referred to as the date of loss.

In addition, the statute now requires that the damage fit a specific definition. In order to receive a claim, the new definition requires that a covered building suffer a specific type of damage. This damage can include interior floor displacement, foundation displacement or buckling of load bearing walls, all of which are defined under the Florida Building Code.

These changes may make filing a claim for sinkhole insurance coverage more difficult. Determining which evolving sinkhole laws apply to your claim can be difficult and time consuming.

If you or a loved one has experienced property damage from a sinkhole incident, it is wise to contact an experienced sinkhole property damage claims lawyer to help ensure your legal rights and remedies are protected.

Article provided by Corless Associates
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