(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues).
In 2009, the Florida legislature passed a law allowing Florida residents to opt-out of sinkhole coverage. The purpose of the law was to help insureds lower their yearly insurance premiums. The practical effect, however, has been that we now have many in this state who have insurance policies that effectively cover nothing in the event of sinkhole damage.
Here’s the difference between sinkhole coverage and catastrophic ground cover collapse coverage in a nutshell:
Sinkhole coverage covers the circumstance where soils ravels into fractures created in the underground limestone. That raveling of the soil causes a home’s foundation to settle unevenly. This uneven settlement (called differential settlement) causes damage to the home and its foundation. A sinkhole is not normally a hole or depression that you can see. Instead, it is something that occurs deep below the home or other structure that is not visibly apparent until damage to the home or other structure begins to manifest. The only way to determine if there is sinkhole activity on a property is to do geological testing deep underground.
Catastrophic ground cover collapse coverage, on the other hand, is far more narrow and restrictive. Most policies are written that in order for a catastrophic ground cover collapse to be covered, the insured must show that:
- There is a visible depression;
- There is structural damage to the home or other insured structure; and
- The home or other insured structure must be condemned. If an insured cannot show all three, there is no coverage. It’s at that time the insured wished they paid the additional premium to keep sinkhole coverage.
The best advice is to never opt-out of sinkhole coverage. Catastrophic ground cover collapse is very unusual. That is usually not how sinkholes present themselves. Therefore, the policy providing only catastrophic ground cover collapse coverage effectively offers no coverage at all.
Usually, a person’s home is their most important investment. With the frequency of sinkhole activity in this state, protect your investment and do not opt-out of sinkhole coverage.