IS YOUR “HOME SWEET HOME,” FLORIDA’S NEXT INSURANCE DISASTER?

“A man travels the world over in search of what he needs and returns home to find it.”

― George Augustus Moore

Jeff Bush was sleeping in his Florida home when his life literally came crashing down around him. The house he was in dropped into the earth. He was swallowed whole by the ground. His peaceful sleep quickly turned into what would be his last nightmare.

Jeff’s life ended in perhaps one of the most troubling ways imaginable.  Resting in the perceived safety of one’s home, and then dropping dozens of feet down into the earth in a pile of concrete, wood, and dirt. 

In a heroic attempt, Jeff’s brother jumped in the sinkhole to try to do anything he could to save his brother—all to no avail. Jeff’s brother’s effort nearly got him killed. His description of the gruesome scene included helplessly watching the bed frame and furniture disappear into the sinkhole, while he faintly heard his brother crying out for help as he was dying.

What caused this catastrophe? It turns out that Florida has an entire set of counties, known as “sinkhole alley” that have very high numbers of sinkholes and a higher risk of potential damages to homes. These areas have become severely devalued due to an onslaught of recent sinkhole litigation. People do not want to buy homes that are located in an “alley” of homes that can disappear into the earth.

At the same time, those who receive settlement money from insurers are taking their settlements and leaving. They have decided that the best plan is to take the money and run. They are not repairing the homes for which they receive settlement money from the insurance companies.  And, those who stick around cannot find buyers.

According to Citizens Property Insurance Corp., which insures more homeowners than any other company in Florida, the following counties are at high risk for sinkhole damage:

·                         Alachua

·                         Citrus

·                         Hamilton

·                         Hernando

·                         Hillsborough

·                         Lake

·                         Manatee

·                         Marion

·                       Pasco

·                       Pinellas

·                       Polk

·                       Seminole

·                       Sumter

·                       Suwannee

·                       Wakulla

·                       Washington

Citizens provides two different types of insurance coverage for sinkhole damage in Florida. One is coverage for Sinkhole Loss Coverage. The other is for Catastrophic Ground Cover Collapse. 

Sinkhole loss is defined in pertinent part “as structural damage to the building, including the foundation, caused by sinkhole activity.” “Sinkhole activity” means settlement or systematic weakening of the earth supporting such property only when such settlement or systematic weakening results from movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation.

Catastrophic Ground Cover Collapse is defined in pertinent part as: “geological activity that results in all of the following: Abrupt collapse of the ground cover, a depression in the ground cover clearly visible to the naked eye, structural damage to the building, including the foundation, and, the insured structure being condemned and ordered to be vacated by the government agency authorized by law to issue such an order for that structure.”

What???

By reading the above “definitions,” it is easy to see why litigation is going to continue perpetually over whether coverage applies to claimed losses. What exactly is covered is anyone’s guess.

Sinkhole loss coverage has to be purchased separately from residential coverage. Catastrophic Ground Cover Collapse is automatically included in the base policy. Moreover, insurers are aggressively raising premium rates for sinkhole coverage as fast as I am typing this post.

Sinkhole damages are significant because they are causing numerous law suits to be filed against Citizens and other insurers. The average claim by Citizens based on the most recent records is nearly $90,000.00.  Aggressive marketing by private insurance adjusters also drives up costs by encouraging homeowners to file lawsuits. There have also been instances of illegal arrangements between engineers and contractors costing insurers hundreds of thousands of dollars by driving up potential claims.

As per Tampa Bay Times Journalist, Susan Taylor Martin, the most current figures show that Citizens took in $32 million in premiums and incurred $245 million in sinkhole losses.

Although there have been a lot of sinkhole claims, it is believed that Citizens’ drastically contributes to its own losses by opting to “fix” sinkhole repairs itself. The losses are driven up by shoddy work and excessively slow construction by companies hired by Citizens. Companies who are supposed to do construction work, and repair cosmetic damages, such as above the ground cracks, damages to walls, doors, floors, and windows----are routinely doing poor work.  This leads to additional claims by policyholders.

Quoting, Susan Taylor Martin.

Every time I hear about an incident involving an unusually tragic accident, I always think to myself, “there but for the grace of God go I.” The issues related to Jeff Bush’s story should be shared with others who—like me—never heard that this type of accident was even possible. Who knew that Florida was a place where people live daily on the verge of natural catastrophe aside from hurricanes?

~Leonardo G. Renaud