Catestrophic Ground Cover Collapse

Yesterday, a large sinkhole opened up in the driveway of a Pasco County homeowner.  I attached a picture of the sinkhole – which I’m sure was quite a surprise to the homeowner when she began to back out of her garage yesterday morning!  The question now arises – would this issue be covered under your policy of homeowner’s insurance?  One would THINK so, but….welcome to the fantasy land that property insurance has become in Florida.

First, the most obvious analysis would be whether this issue would be covered under the “sinkhole loss” portion of the homeowner’s insurance policy.  Actually, thanks to the recent changes in the sinkhole statutes enacted in Florida, this loss would most likely not be covered as a “sinkhole loss”.  A sinkhole loss is defined under most policies of insurance as structural damage caused to the home by sinkhole activity.  Clearly, the attached picture reflects sinkhole activity, but does it reflect “structural damage” (as now defined in your policy) to the residence?  Pursuant to the recently enacted laws, in order for your home to have incurred “structural damage”, your house pretty much has to be reduced to a pile of sticks (the statute has a slightly more technical definition, but you get the point).  So, even though the subject house is clearly being affected by sinkhole activity, since the damage to the house does not arise to the new definition of “structural damage” = No Coverage!

But there is also a portion of your insurance policy which provides coverage for Catastrophic Ground Cover Collapse.  It is this coverage that the insurance company lobbyists touted as being available to cover situations where an “actual” sinkhole opened up and destroyed your house.  BUT – this Catastrophic Ground Cover Collapse coverage only applies if ALL of the following conditions are met: (1) An open hole you can clearly see with the naked eye (check!); (2) Damage which is sudden and not gradual (check!); and – here comes the kicker – the home must be condemned and ordered vacated by a government entity.  Well – since the subject home does not appear to by destroyed and therefore has not been condemned, all of the required elements have not been met and therefore = No Coverage!

Unfortunately, this homeowner is about to experience the Sinkhole Loophole mess which our Florida Legislature has created for us.  As always, when confronting a complex insurance claim issue, it is wise to contact a qualified insurance claim lawyer to help guide you through the process and to explain the rights you have under your insurance policy.

 

By now, you’ve most likely seen the stories about the large sinkhole that opened in Dunedin, Florida this week.  The Dupre family was awakened early Wednesday morning to what sounded like someone noisily attempting to break into their house.  Upon inspection, the homeowners were shocked to see that their entire back porch was sliding into a rapidly expanding sinkhole.  The family, along with several neighboring households, were all immediately evacuated by the police and soon, both this home and the adjacent house were officially condemned by the city.  As of this posting, the sinkhole has expanded to over 90 feet wide and almost 60 feet deep.

Those are the facts you’ve heard thus far from the media.  What you probably haven’t heard is the long series of events which led up to this disaster.  Approximately two years ago, Michel Dupre noticed cracking to his home and contacted his insurance company – Citizens Property Insurance Corporation (Yes – that’s right – good ole’ Citizens again!).  After testing the property and realizing that sinkhole activity was causing damage to the Dupre residence, Citizens tried to force the family to accept minimalistic repairs to their home.  The repair method mandated by Citizens only consisted of injecting grout into the soil beneath the home and made no allowance for any actual stabilization of the home.  Insiders in the field will tell you that “repairing” a sinkhole home by grouting alone will fail to fix the problem over fifty percent of the time and will almost always cause additional damage to the home.

Take a look at the attached Standard Penetration Testing (SPT) boring logs from Citizens’ investigation of the Dupre home.  When testing a property for sinkhole activity, engineers check the density of the soil by striking the drill bit with a 140 pound hammer and then noting how many blows it takes to drive the drill bit down 12 inches.  (For instance, on SPT boring #1 you can see that at 15 feet below the surface it took 3 blows of the hammer to drive the drill bit down 12 inches).  If you look closely at SPT boring log #3, you will note that there is a “WR” condition from approximately 25 feet below surface to 70 feet below surface.  WR stands for Weight of Rod.  In order for the engineer to record a WR condition, the drill bit must actually FALL UNDER ITS OWN WEIGHT without even being hit by the hammer.  As you can see, beneath the Dupre residence, the drill bit fell OVER 45 FEET – which indicates that Citizens knew there was at least 45 feet of “nothingness” below the Dupre house!  In spite of this finding, Citizens’ engineer only categorized the damage to the Dupre home as “slight” and noted that there was very little possibility of any further damage.  (Bet he wishes he could take that back!)

The homeowners (understandably) had severe reservations about the minimalistic grouting program being pushed upon them by Citizens and therefore the homeowners hired engineers and other professionals to help encourage Citizens to properly repair the home.  In spite of the clear evidence that Citizens’ mandated repair would be insufficient to repair the home and to protect the Dupres, Citizens refused to listen to the Dupre’s experts for over two years.  Now you may have heard in the media that Citizens, “offered to pay the family $90,000 to repair the home”, but that is absolutely false.  In fact, Citizens has only offered to pay the Dupres $1,500 (not a misprint – One Thousand Five Hundred Dollars) despite the all of the evidence (even from its own engineers) of the true cost to repair the home.

As I’ve referenced in previous posts, Citizens has spent over 100 million dollars fighting insurance claims and absolutely refuses to make any payment whatsoever on sinkhole claims.  After two years of fighting for coverage, the Dupre family had no option but to let Citizens have its way with their home.  After two days of letting Citizens stubbornly pump “grout” beneath their home….you guessed it!  (And yes, that is a swimming pool you see below being squeezed down into the hole.)

Clearly, the Dupres are now going to “have their way” with Citizens – hopefully a jury of homeowners will help decide Citizens’ fate.  But the question then arises – what about the neighbors?  At least two homes have now been condemned and several others have incurred grevious damage as the direct result of Citizens’ actions -what recourse do these neighbors have?  If they have sinkhole coverage, then these homeowners could look to their own policies for loss coverage, but why should these other carriers have to bear the burden of Citizens’ arrogance?  What if the neighbors do not have sinkhole coverage?  Unless the damage to their home mandates condemnation (and thereby activating coverage under the Catastrophic Ground Cover Collapse portion of their policy), these homeowners would have no recourse and would have to make any repairs themselves.  Thanks Citizens!

Hopefully Mr. Scott and the rest of our elected officials in Tallahassee will take this situation to heart and will enact some real reforms at Citizens.  If not, the voters of Florida should hold them accountable on election day.  Because, who knows – you could be Citizens’ next victim.