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.