Many insurance companies are doing everything they can to not pay claims. One obvious method is convincing the Florida Legislature to enact laws that limit circumstances under which they must pay a loss.
A recent law passed by the 2011 Florida Legislature seems to limit when Florida insurance companies have to pay for sinkhole damage. The new law requires the damage to be "structural damage," which is defined in Florida Statute 627.706. The law took effect on May 17, 2011:
(k) “Structural damage” means a covered building, regardless of the date of its construction, has experienced the following:
1. Interior floor displacement or deflection in excess of acceptable variances as defined in ACI 117-90 or the Florida Building Code, which results in settlement related damage to the interior such that the interior building structure or members become unfit for service or represents a safety hazard as defined within the Florida Building Code;
2. Foundation displacement or deflection in excess of acceptable variances as defined in ACI 318-95 or the Florida Building Code, which results in settlement related damage to the primary structural members or primary structural systems that prevents those members or systems from supporting the loads and forces they were designed to support to the extent that stresses in those primary structural members or primary structural systems exceeds one and one-third the nominal strength allowed under the Florida Building Code for new buildings of similar structure, purpose, or location;
3. Damage that results in listing, leaning, or buckling of the exterior load bearing walls or other vertical primary structural members to such an extent that a plumb line passing through the center of gravity does not fall inside the middle one-third of the base as defined within the Florida Building Code;
4. Damage that results in the building, or any portion of the building containing primary structural members or primary structural systems, being significantly likely to imminently collapse because of the movement or instability of the ground within the influence zone of the supporting ground within the sheer plane necessary for the purpose of supporting such building as defined within the Florida Building Code; or
5. Damage occurring on or after October 15, 2005, that qualifies as “substantial structural damage” as defined in the Florida Building Code.
Most insurance policies cover physical damage of any sort. Cosmetic damage has always been considered "physical" damage.” This is significant change for those who suffer a sinkhole loss.
The insurance industry wants to make these legislative changes to apply retroactively and limit what they have to pay to their customers for losses that occurred before the new law took effect. A circuit court presented with the issue has rejected the insurers’ position:
ORDER DENYING DEFENDANT’S MOTION FOR APPLICATION OF A TECHNICAL DEFINITION OF "STRUCURAL DAMAGE"
This cause came before the Court on June 2, 2011, on Defendant’s Motion for Application of a Technical Definition of "Structural Damage." The Court being fully advised in the premises, and after hearing the arguments of counsel of record states that it is hereby:
ORDERED AND ADJUDGED as follows:
Defendant’s Motion is DENIED. The Court finds that, notwithstanding recent amendments to Fla. Stat. §627. 706, et. seq., effective as of May 17, 2011, the phrase "structural damage" as it relates to the subject insurance policy in effect as of September 17, 2008 and as set forth in Fla. Stat. §627.706 (2008), is undefined, and that the Florida Legislature did not intend for a technical definition to apply. The phrase "structural damage" shall mean damage to the structure in question; in this case Plaintiffs’ house. (emphasis added)
This decision calls for a celebration among my fellow insurance coverage nerds. And to that end, I would ask you to Raise Your Glass: