Last week, I discussed the tragic sinkhole that took a man’s life in Seffner, Florida. Since my last post, another sinkhole manifested itself less than two miles from where Jeff Bush lost his life. A few days later, Mark Mihal, a mortgage broker from the St. Louis suburb of Creve Coeur, had a sinkhole collapse beneath his feet and free fell eighteen feet while golfing at the Annbriar Golf Course in Waterloo, Illinois. Mr. Mihal was fortunate because his three friends acted quickly and rescued him from the depths of the earth. He suffered a dislocated shoulder, but is fortunate to be alive. It is difficult to think of a time that sinkholes have gotten this much attention nationally; but sinkhole events happen often. I have included a link to a video put together by ABC News, that depicts the sinkhole events that have been getting so much attention over the past few weeks.
I recently received a geotechnical investigative report where testing confirmed sinkhole activity as a cause of damage to the property. The insurance company denied the sinkhole claim because the damages to the property have not yet reached the level of “structural damage” as defined by the newly amended Florida Statute 627.706(k). If this seems illogical to you, you are not alone.
As I discussed last week, the current statutory framework for sinkhole losses in Florida is not good enough. The truth is, it places people in danger. When the Florida Legislature began requiring sinkhole coverage in 1981, policyholders had the right to request testing once damages commonly associated with sinkhole activity manifested. Policyholders had this right until May 17, 2011. Today, if a policyholder notices damages that may be related to sinkhole activity, insurance companies are no longer required to test the property for sinkhole activity, unless the carrier first confirms “structural damage.”
As I stated last week, the new standard is absurd. The testing required to confirm or disaffirm the presence of structural damage is almost identical to the testing required to determine the presence of sinkhole activity. The engineering companies still test the subsurface of the property; but they terminate the subsurface borings at approximately twenty-five to thirty feet. What is the significance? The engineers are paid approximately the same fees to test the property for structural damage, but because the limestone is not tested, the engineers do not determine whether sinkhole activity is affecting the property.
Who wins? The insurance companies and their engineers. The insurance companies win because fewer properties will be tested for sinkhole activity, which, in turn, means fewer claims. Their engineers win because they still are for testing the properties for “structural damage.”
Who loses? The policyholders of Florida. Under the new sinkhole laws, policyholders no longer have the right to have their properties initially tested for sinkhole activity. Even if a policyholder desires for his or her property to be tested for sinkhole activity and the insurance company confirms the presence of such, there is no coverage unless the damages to the property reached the level of structural damages as delineated in my last post.
The result is scary. A policyholder who receives a sinkhole confirmation, but is denied coverage, is now required to wait until the damages worsen to a point of triggering one of the structural damage standards, such as imminent collapse, before coverage is provided. This is not practical and needs to be addressed by the Florida Legislature.
Now is the time to demand a change. The current awareness of and attention to sinkhole danger has never been higher. If you think Florida laws need to be changed, call your state representative and senator and ask them to initiate and support the changes you want.