Historically, in Florida, if you saw settlement cracks in a structure or pavement, all you had to do to get a live sinkhole insurance claim was state that the ground was subsiding. With open claims, you’d find building owners (and their specialty plaintiff attorneys, engineers, and geologists) pitted against the insurance company (and their defendant attorneys, engineers, and geologists) seeking the maximum monetary compensation for “sinkhole” damage. The result was many years of runaway claims and skyrocketing premium costs for sinkhole insurance coverage.
Here’s a quick look at the numbers: sinkhole claims in Florida rose from 2,360 in 2006 to 6,694 in 2010. Over the same period, costs increased from $200 million to $409 million.
As a result, Florida enacted new legislation in 2011 that changed the landscape with respect to sinkholes and insurance claims.
First, the legislation tightened the definition of a sinkhole to: “a landform created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater. A sinkhole forms by collapse into subterranean voids created by dissolution of limestone or dolostone or by subsidence as these strata are dissolved.”
Therefore, minor settlement or surface subsidence alone no longer triggered a sinkhole claim.
The new legislation also removed the requirement that homeowners’ insurance policies cover non-catastrophic losses, which resulted in a noticeable drop in insurance premiums. In the years since the adoption of the new legislation, Florida saw the number of sinkhole-related claims drop from over 4,500 in 2011 to about 3,100 in 2012 and 1,200 in 2013.
The legislation of 2011 had unintended consequences for homeowners, however: those in sinkhole-prone areas were at risk for minor structural damage such as sunken floors or cracked walls, but because those issues were non-catastrophic, repairs weren’t covered. So, in 2016, further legislation allowed insurance companies to voluntarily provide coverage for less-than-catastrophic damage; with the average cost of sinkholes in Florida ranging from $50,000 to $60,000, this offered much relief to residents.
Today, if you believe you have a sinkhole, you should contact your property insurance company and report the conditions; they’ll dispatch a qualified inspector to assess the situation. In some cases, this will be a neutral evaluator – a licensed engineer or geologist certified by the Florida Department of Financial Services as an independent body and mutually agreed upon by the insurer and the insured. A neutral evaluator provides impartial recommendations to address existing damage and hazards, and each party must adhere to those recommendations.
If you think you have sinkhole activity, follow the steps here to secure the site and stay safe. For questions regarding the investigation or restoration process, or for more details concerning the neutral evaluation process, feel free to contact us. ATC has a certified neutral evaluator on staff who would be happy to answer your inquiry.