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What are the Florida laws regarding sinkhole insurance?
Tuesday, July 30, 2019
Florida Statute 627.706 requires insurers authorized to sell property insurance in the State of Florida to provide coverage for “catastrophic ground cover collapse,” but the law’s interpretation of it means that the damage by many sinkholes will not be covered. The law defines a sinkhole as “a land form created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater.”
A “catastrophic ground cover collapse” is defined as “geologic activity that results in all of the following: 1) The abrupt collapse of the ground cover; 2) A depression in the ground cover clearly visible to the naked eye; 3) Structural damage to the building including the foundation; and 4) The insured structure being condemned and ordered vacated by the government agency authorized by law to issue such an order for that structure.” So, in essence, the damage has to be so bad that the house must be abandoned and condemned.
Any lesser damage is not covered unless you buy a sinkhole rider or it is specifically included in the basic policy, but the same statute also requires all insurance companies to offer coverage for sinkhole damage that is less than catastrophic, at an additional premium. The insurance company has the option to require testing before binding coverage and, if sinkhole activity is detected on the property or observed within a certain distance, coverage may be declined.
Also, damage that may appear to be sinkhole related could be determined to be caused by expansive clay soils that shrink during dry weather and expand during wet weather. Insurance companies consider clay soil to be a preexisting condition that is not part of sinkhole coverage. A long period of drought is typically when clay soil shrinkage causes structural problems that mimic sinkhole damage.
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