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.

 

As part of an ongoing effort to give the shaft to Florida consumers, a bill was recently filed with the Florida Legislature which would greatly restrict – or even eliminate – the rights of property owners attempting to properly repair damage caused to their homes by sinkhole activity.  Senate Bill 416 (blandly titled, “Sinkhole Coverage”) is a blatant attempt to not only force property owners to repair their property in the manner chosen by Citizens Property Insurance Company, but to also relieve Citizens of any further liability if its mandate repairs fail to repair the home.

In order to understand the true malevolent nature this proposed bill, it is necessary to understand the manner by which sinkhole damaged properties are normally repaired.  If a property is deemed to have been damaged by sinkhole activity, the insurance company must then provide coverage for the cost to repair the property.  Usually, the engineering firm which initially found the sinkhole activity would set forth a recommended repair method, but then, per the Florida Statutes, the homeowner would also have a say in the manner by which the property was to be repaired.  Through this statutorily mandated consultation between the insurance company and the property owner, it was hoped that an agreeable resolution could be reached and the property repaired to the satisfaction of all.  Furthermore, the law mandates that, if the homeowner was forced to used the insurance company’s repair method, the insurance company must stand behind these repairs and if any further damage resulted or the mandated plan was not sufficient, the insurance company must come back and provide any additional  repairs necessary.

Citizens Property Insurance is now attempting to “legislate” its way out of this deal – but in an amazingly brazen way.  Per SB 416, Citizens would be able to legislatively mandate that property owners not only repair the property pursuant to Citizens’ method, but that the property owners MUST use one of Citizens’ “chosen” repair companies.  But here comes the real kicker – these repair companies must fix the property on a “fixed price” contract.  In essence, whatever cost estimate Citizens’ engineer thinks up, the third party repair company will only be paid that amount per the contract and, if the cost estimate is not accurate or the job runs over, the third party repair company must continue to repair the property and eat the difference in cost!    But wait, it gets better.  Not only does the repair company have to eat any overages in the repair costs (which almost always occur), the repair company would be legislatively mandated to “guarantee” the repairs down the road!  (Remember, it was Citizens’ engineer who made the cost/repair estimate, not the repair company.)  If the shoddy repairs set forth by Citizens fail and further damage is caused to the home – the third party repair company is stuck with having to pay for the damage – and Citizens gets to walk away with no exposure!   Under the new proposal, despite Citizens being able to force its version of the repairs upon the property owner, Citizens’ only exposure for these repairs – even if the repairs catastropically fail (think Dunedin) – is paying the initial cost estimate set forth by its own engineer.

Now, let’s take this one logical step further.  If Citizens knows that its only exposure is paying the repair cost estimated by its engineer, and Citizens is the entity that pays the engineer….how long will it be before this engineer starts getting pressure to “under-estimate” the repair protocols?  It would be a great deal for Citizens – if its engineer can look at a repair job that should cost $50,000, but instead the engineer gives the opinion that the repair cost should only be $30,000 – that would be all Citizens would have to pay!  And hey, when the expenses hit their true value during the repair of the property, it is the third party repair company that has to pick up the tab – no matter what the cost!  What a deal!  Heck – why not just estimate the cost of repair at a dollar – by law, that is all Citizens would then have to pay!

Clearly, Senate Bill 416 is not good for Florida consumers – or even repair companies for that matter!  During the upcoming legislative session, it is important that all Florida property owners make sure that their elected officials fight for the rights of their constituents and not allow insurance company lobbyists to have their way in Tallahassee.

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.

Citizens Property Insurance Corporation has been earning a reputation for systematically denying almost every insurance claim asserted by its policyholders.  Instead of honoring valid claims, Citizens spends millions of dollars each month “defending” claims – the same type of claims that other insurance companies would routinely pay without question.  Although those of us in the industry have been decrying Citizens’ business practices for years, last week the Tampa Bay Times finally posted an article pointing out Citizens’ track record of fighting valid insurance coverage claims and needlessly lining the pockets of law firms to “defend” against these claims.

Now, on the chance you might believe that Citizens’ policy of denying claims and raising meritless defenses is just urban legend, I offer the following examples of Citizens’ behavior from our recent experience:

Example A – Our client presented Citizens with a sinkhole damage claim, which Citizens summarily denied.  We provided Citizens with testing evidence which undeniably reflected sinkhole activity on our client’s property and also provided reports from neighbors on all three adjacent sides (left, right and behind) which had been confirmed for sinkhole activity.  Citizens’ response?  They offered $500.  They also promised that, once the policy holder ultimately won at trial (which they conceded would happen), Citizens would appeal the outcome (regardless of merit) in order to further drag out the process.

Example B – Citizens’ engineers actually confirmed sinkhole activity on the property of another one of our clients, but still – three years later – Citizens refuses to pay for the appropriate repair of the property.  Just yesterday, a large sinkhole actually opened up directly next to their house.  Our clients’ story even made the evening news last night.  Even so, Citizens refuses to provide coverage for the appropriate repair of the home.

Sadly, there is no one guarding the hen house at Citizens.  Outside vendors – mostly insurance defense law firms with the most to gain from Citizens’ stance on fighting claims – have convinced Citizens that the best way to handle claims is to fight tooth and nail on every issue, even when there is absolutely no chance of winning.  Obviously, the harder you fight payment on a given claim, the more money the insurance defense law firm can make billing Citizens for delaying/defending/denying the claim.

The other side of this coin is that, once the policy holder ultimately prevails on his claim, the insurance company is also responsible for the payment of the policyholder’s attorney’s fees and costs.  Accordingly, Citizens ultimate “reward” for denying valid claims is that the insurance company has to pay (1) the full amount of the repair costs, (2) pre-judgment interest on this amount, (3) the policyholder’s attorney’s fees and costs, and (4) Citizens’ own attorney’s fees and costs.  It doesn’t take a financial genius to see that it makes more sense to resolve a valid claim early in the process – and thereby avoid the payment of items (2) through (4) above – rather than needlessly waste money defending a claim which the insurance company will ultimately have to pay anyway.  But until there is a change of heart – or management – at Citizens Property Insurance, it may be best to retain qualified representation early in the insurance claim process.

By now, you may have seen the video of the sinkhole swallowing portions of a forest in Louisiana, but – like all classic films – it is worth seeing again.

Louisiana Sinkhole
Click Image to Watch Video

This video should serve as a shocking reminder of the sudden and brutal nature of not only sinkholes, but of all natural disasters.  Within the past few weeks, we have witnessed numerous sudden and catastrophic collapses – not the least of which include this scene in Louisiana, the violent collapse of the vacation condos near Disney World, and the numerous smaller sinkholes that have opened locally due to the heavy rainfall.

Now more than ever, it is important to check your homeowners insurance policy to verify that you have adequate coverage to protect your family in case your home suffers damage from sinkhole activity, hurricane, fire or other type of loss.  Although you may not be able to prevent Mother Nature from having her way with your property, you can take steps to protect yourself from the financial impact of such loss and to get yourself back on your feet again.

 

Over the past year or so, we have been getting an increasing number of calls from property owners who continue to experience sinkhole damage to their property – even after their property has been repaired by the insurance company!  The factual circumstances are almost always the same – the insurance company mandates that the insured repair the sinkhole damage pursuant to the recommendations of the insurance company’s experts and then, after these supposed repairs are completed, the property continues to incur new damage.  Although sometimes this new damage appears immediately after the insurance company’s repairs are completed, many times the damage appears years later.  In almost every scenario, after the insured contacts the insurance company regarding this damage, the insurance company’s expert issues a quick report saying that the damage – if the expert even acknowledges the damage – is not from sinkhole activity and the claim is then summarily denied.

Many property owners do not realize that if the insurance company repairs the property pursuant to the insurance company’s recommended repair method, the insurance company must stand behind that repair method and must continue to repair the property – regardless of the cost – until the property is fully remediated.  The law on this process is clear – if the insurance company mandates that a property owner perform the insurance company’s sinkhole repairs to the property, the insurance company must continue to pay the cost of the repairs until the property is fully remediated or, if the insurance company gives up on repairing the home after beginning the process, the insurance company must issue a check for policy limits to the property owner without deduction for monies already spent towards the repair! 

Always know that you have rights against your insurance company and that you do not have to accept whatever remedy the insurance company may try to force upon you.  Clearly, it is important to have your claim reviewed by an experienced insurance attorney who can explain your options and, if necessary, zealously pursue your claim against the insurance company.

For the past three years, my clients have had to battle with their insurance carrier, Tower Hill Select Insurance Company, to obtain coverage for the repair of damage caused to their home by sinkhole activity.  Time and time again, Tower Hill Select refused to provide any assistance to our clients and instead, threatened to pursue legal action against them for the insurance company’s attorney’s fees and costs.  We were finally able to obtain justice for our clients at trial last week.

On the first day of trial, the Court struck all of our experts’ testing and data which reflected the existence of sinkhole activity on the property.  The Court made this ruling because the insurance company was able to confuse the Court as to the law applicable to this matter and to convince the Court that our clients’ testing and data was “not relevant” as to the issue of existence of sinkhole activity on the property.  What?!?!  Although the Court’s ruling on this issue created a right for our clients to appeal this ruling and to seek the reversal of same, at trial we had no option but to push forward and to do the best we could for our clients with the evidence we had.  Unfortunately, the only thing we had left to present to the jury was the data obtained by the insurance company’s experts.  Fortunately, the data and opinions set forth by the insurance company’s experts were clearly biased towards denying the claim and replete with errors and omissions.

In the end, the jury saw through the shell game set forth by Tower Hill Select and their experts and we were able to obtain a jury verdict for  the full amount of our clients’ damages.  This victory was especially sweet as we were able to prove our case merely through the severe impeachment of the insurance company’s experts and the ability to greatly discredit their biased data.  Since we were the prevailing party at trial, the insurance company is now also responsible for the payment of not only all the attorney’s fees and costs associated with our representation of our clients, but also pre-judgment interest on the full amount of the jury award for the past three years.

 

Back in 2007, the insurance industry lobbied for the passage of an alternative dispute resolution mechanism for disputed sinkhole claims – a process which they cleverly entitled “Neutral Evaluation”.  The concept was that if there was a disagreement between a property owner and an insurance company as to any issue related to a sinkhole claim, either party could request that the matter be submitted to the neutral evaluation process.  Upon submission to neutral evaluation, a “neutral” third party expert would review all available reports and estimates and render an opinion as to the cause of the loss and/or the cost to repair.  (Please refer to my previous post re: Neutral Evaluators for a further explanation as to why I place the word “neutral” in quotation marks.)

The new wrinkle in this process is that Citizens is now electing to ignore the recommendations of the neutral evaluator – even when Citizens demanded that the property owner submit to the process!  The scenario we are seeing is that as soon as Citizens senses a dispute between its experts and the property owner, Citizens will immediately file for neutral evaluation in order to prohibit the property owner from filing a law suit.  BUT – if the neutral evaluator then decides that Citizens’ position on the claim is incorrect and that either coverage should be found or a better repair method is warranted, Citizens will then refuse to honor such decision and will mandate that the property owner agree to Citizens original position.

Clearly, Citizens’ current tactics are in direct contravention of the purpose of the neutral evaluation statute.  Citizens new stance on this process is especially shocking in light of the fact that the neutral evaluation process was a product of the insurance industry’s efforts to limit property owners rights with regard to sinkhole claims.  Clearly, it is now more important than ever to seek the advice of a qualified lawyer who specializes in sinkhole claims in order to best protect your rights against the insurance company.

Back in the good old days of yore (which, at this point, was approximately 4 years ago), whenever an insurance company provided you with a policy of homeowner’s insurance, it automatically included coverage for any damage caused by sinkhole activity.  In 2007, as part of the insurance industry’s never ending attempt to limit coverage to its clients, insurance company lobbyists convinced the legislators in Tallahassee to change this law and to make sinkhole coverage “optional”. 

In fact, after that initial revision to the law, if you lived in Pasco or Hernando counties specifically, sinkhole coverage was automatically excluded from your insurance policy, and if you wanted this coverage, you had to specifically request such coverage and pay an initial premium for it.  For the rest of the state, sinkhole coverage was still included in your policy, but you could opt out of such coverage – if you were feeling lucky!

As part of the insurance industry’s “bait and switch”, the Legislature allowed insurance companies to completely remove full sinkhole coverage from their policies in Florida and to provide Catastrophic Ground Cover Collapse Coverage instead.  In order to qualify for coverage under this new provision, property owners must meet a four prong test – the last of which states that coverage will only be allowed if the property is both “Condemned” and ordered “Vacated” by a “governmental entity”.  What? 

Needless to say, it is vitally important to thoroughly review your policy of insurance.  Should you find that the coverage provided by your policy provides insufficient protection, you should give a lot of thought to obtaining more complete coverage – preferably long before the need to place a claim arises!

Over the past several years, many homeowners in Florida have had the misfortune of incurring damage to their property as the result of sinkhole activity. For many homeowners, the headaches and inconvenience caused by having to undergo the initial repair of this damage turned out to only be the beginning of the battle.

In almost every claim, when an insurance company agrees to repair an insured’s property, the insurance company will only agree to provide coverage for the repair protocol set forth by its chosen expert. Not surprisingly, the insurance company’s chosen expert will usually choose the least expensive repair method for the home. (It goes without saying that, were the expert to recommend a more complete repair method, he would not be the insurance company’s “chosen expert” for very long!) Faced with the insurance company’s mandate, the homeowner often agrees to allow the insurance company to repair the home pursuant to the insurance company’s chosen method.

The problem which has now arisen for numerous property owners is that the repair method mandated by the insurance company is insufficient to fully repair the property. Even though the insurance company’s version of the repairs have been completed, the property owner continues to incur damage to the home as the result of the sinkhole activity. Unfortunately, when this additional damage is pointed out to the insurance company, the carrier will deny any further repair to the property and state that the issue has been resolved – regardless of the existence of this new damage.

Fortunately, these property owners continue to have rights under their policies of insurance. Under Florida law, if an insurance carrier mandates that an insured repair his property pursuant to the insurance company’s chosen repair method, the insurance company must fully warrant those repairs. In other words, if the insurance company’s chosen repair fails to fully solve the problem, the insurance company is responsible to pay for any additional repairs necessary in order to bring the property to its pre-loss condition.