Back in early January, The Tampa Tribune published a story about "sinkhole alley legislation" that aimed to allow homeowners to purchase sinkhole coverage for damage that did not rise to the level of being structural damage or "catastrophic." Earlier last month, Florida Politics reported that a Florida Senate subcommittee "unanimously approved a bill enabling insurance companies to sell standalone sinkhole insurance policies for damages falling short of catastrophic loss." The Florida House of Representative's counterpart to the Senate bill, HB 1327, has also been filed. Both bills need to pass through two more committee hearings before they can be voted on by the respective legislative bodies.
In the meantime, what do you need to know about this legislation and the ways in which it could impact your sinkhole insurance coverage?
Homeowners' Insurance and Catastrophic Sinkhole Coverage
Without SB 1274, homeowners in West Central Florida cannot purchase sinkhole coverage for damage that does not devastate the property. In other words, if you have cracks in your wall or your window simply will not shut properly because of sinkhole damage, it is quite likely that your insurance company will not pay to have the damage repaired. To be compensated under a current policy carrying sinkhole coverage, the home must have sustained "structural damage" as defined by the current Florida Statutes. As the article in The Tampa Tribune explains, in 2011 Florida lawmakers decided to restrict sinkhole coverage "only to the most serious structural damage to homes or businesses."
Why did the legislature approve such a measure? In short, Florida lawmakers were attempting to limit the number of (sometimes superfluous) sinkhole claims. According to Senator Jack Latvala, who filed SB 1274, the legislature effectively "said the only thing covered on a normal homeowner insurance policy was catastrophic damage," which in practice means, "if your house falls into a sinkhole, you're covered." While that may be an extreme reading of the law, it is not far off. Structural damage doesn't require the home to be swallowed by a sinkhole, but it does require far more than cosmetic damage. To obtain coverage under the current sinkhole laws, significant damage affecting the structural integrity of the home must be proven to have been caused by sinkhole. With these changes to the law that took effect in 2012, insurance companies could not offer homeowners coverage for cracks in the walls, sunken floors, or other less devastating forms of sinkhole damage.
Yet as those who support SB 1274 have explained, "it went from one extreme where almost anybody could file a sinkhole claim and lots were moved through that were not necessarily legitimate" to a situation in which very few Floridians could file a sinkhole claim, even if they had sustained legitimate damage. Most lawmakers agree that Tampa residents and others living in the "sinkhole alley" region made up of Hillsborough, Pasco, and Hernando Counties should not be able to simply file an insurance claim when they notice a crack in the driveway. However, it does not seem fair that West Central Florida homeowners cannot turn to their insurance company for coverage when they experience large cracks in their walls because of a sinkhole.
Affording Sinkhole Coverage for Lesser Forms of Damage
Given that sinkholes are so prevalent in Florida, parties who support the bill emphasize that we need to provide a reasonably priced option for homeowners who want to be covered if their house sustains sinkhole damage that does not either affect the structural integrity of the home or is not swallowed up by a sinkhole. Sinkhole damage that does not rise to the level of being catastrophic can still cost tens of thousands of dollars. In the article, Latvala discusses sinkhole damage to his home that would not be eligible for coverage under the current law. That non-catastrophic damage totaled around $50,000.
Now that the bill has passed several committees in the Senate, it looks like it could to be on its way to approval. However, as Latvala made clear in the Florida Politics post, SB 1274 "still has a way to go." In the meantime, if you filed a sinkhole damage claim and were denied, an experienced West Central Florida sinkhole damage attorney may be able to help. Contact the Wells Law Group, P.A. for more information.