Pursuant to Florida law, an insurance company is obligated to conduct a sinkhole investigation once it is determined the damage is consistent with sinkhole activity. Once the cause is determined to be a sinkhole loss, the insurance company is obligated to either authorize the repair of the home, or to tender the limits of their policy. The issue of determining the amount of available coverage can be complicated, however, due to the laws governing coverage. While the amount of coverage, known as the coverage limits, provides a basic structure for coverage, there are other, material laws governing how an insurance company must pay and when.
Payments for Sinkhole Claims
When the sinkhole claim is confirmed, most insurance companies will tender a payment for cosmetic repairs. This money is intended to be used after the subsurface repair is completed for the structure itself. The manner in which the payments are made are governed by Section 627.707(5)(a)-(b), Florida Statutes . Pursuant to these sections, the insurance company is obligated to pay the actual cash value of the cosmetic damages. Additionally, they are obligated to pay the subsurface amounts due, once the insured undertakes the repair to the subsurface. However, the problem with these kinds of repairs is that the estimates are rarely accurate, and often understate the amount of damage and actual cost to complete. Accordingly, Florida law requires that in the event the repairs are later determined to be higher than the amount of coverage available, the insurance company must either (1) agree to pay the amount of repairs, regardless of how much insurance is available, or (2) simply pay the limits of their policy, regardless of how much coverage has been expended to that point. As such, if an engineering firm is hired to conduct the repairs and later finds out their estimate was wrong, the insurance company may have to actually tender their coverage limits anyway, even without taking any credit for money paid.
Sinkhole Coverage Amount Conflicts
The fact that these rules exist, especially for the immense costs involved, makes this a common area of conflict between the insurance company and their insureds. Frequently, due to a lack of understanding of the applicable laws, many insureds and insurance companies make incorrect choices in the manner in which they handle these claims. It is important to understand that like all other statutes, the sinkhole laws were designed by politicians, not insureds or engineers, and are thus complex and prone to error.
If you have a situation requiring legal representation for a sinkhole damage claim, contact Corless Barfield Trial Group' Florida personal injury law firm at 877-517-5595.