Under a new law that takes effect July 1, 2016, insurers may offer a new type of personal lines residential sinkhole coverage. Florida Governor Rick Scott signed CS/CS/SB 1274 into law, which created Section 627.7151, Florida Statutes, allowing insurance companies, at their option, to provide limited sinkhole coverage for a “sinkhole loss” to homeowners—which is a lower threshold of damage than "catastrophic ground cover collapse"—and is defined as "structural damage to the covered building, including the foundation, caused by sinkhole activity."
Even with this change, the current requirements remain that if the insured’s professional engineer determines that the repairs exceed the policy limits, then the insurer must pay to complete the recommended repairs or tender the full policy limits to the homeowner.
The limited sinkhole coverage is subject to the statutory requirements for sinkhole insurance in ss. 627.706-627.7074, F.S., with the following exceptions:
- Coverage is only available for personal lines residential coverage;
- Coverage may be limited to repairs to stabilize the building and repair the foundation, and insurers are not required to include coverage for contents and additional living expenses;
- Citizens Property Insurance Company cannot issue this insurance;
- Insurer and insured can agree on the deductibles;
- Insured and insurer can agree on policy limits, but limits less than $50,000 are prohibited unless that amount exceeds the full replacement cost of the property; and
- Insured must sign special notices stating that insured understands the limits of the policy, including when the policy limits coverage to less than the full replacement cost of the property, or when the deductible exceeds the amount permitted under Fla. Stat. § 627.706(1)(b).