Florida Sinkholes: Science and Policy

7. Sinkhole Policy

7 Sinkhole Policy Sinkholes are vexing features on the modern landscape (Zhou and Beck 2007). When they form, they can cause considerable damage to our property and infrastructure , leaving us with damages, repairs, and a sense of unease about our firmament (Quinlan 2007). In June 2001, Raymond Kelly of Lutz lost his sense of comfort about the stability of his property. After a loud crash, he found that his home was severely damaged: doors ruptured and jammed and part of the roof torn away. But what caused the problem? Kelly immediately thought the problem was a sinkhole because several other homes in his neighborhood had experienced similar problems. His insurance company hired a geotechnical investigator who did an assessment of his property using standard investigative techniques and found that the problem was not a sinkhole but settling sand and buried organic matter. Kelly was shocked with this assessment and found that his homeowner’s insurance covered sinkhole damage but not damage from settling sand or buried organic deposits. As a result of the investigator’s findings , Kelly hired an attorney to challenge the insurance company’s evaluation. The geotechnical company the attorney hired to evaluate the property found a different cause than did the insurance company, concluding that the damage was caused by sinkholes. How can two geotechnical companies come up with distinctly different results? My insurance company recently dropped sinkhole coverage from my home, built in 1961 in Temple Terrace. If I wanted coverage, I needed to request it. When I did, I was told that I needed to pay $50 for an evaluation. I set up an appointment for the evaluation and the person wandered through the property and my house. Sinkhole coverage was denied. I was stunned. There was absolutely no explanation from the insurance company, just a general denial saying that the evaluation I paid for showed evidence of risk. But they had produced no evidence for the risk. The home in Seffner, Florida, in which a man died in 2013 after a sinkhole Sinkhole Policy 161 formed and a portion of the house collapsed had undergone a similar inspection , but the home passed that inspection. Why are sinkholes covered in some policies while other subsurface irregularities are not covered? This chapter reviews current sinkhole insurance rules and some of the problems that arise because of rules that currently exist. In addition, it will discuss several other policy issues related to sinkholes, including the use of sinkholes for water retention. Given that sinkholes are often associated with springs and caves, a brief summary of current regulations regarding springs and caves in Florida is also included. Sinkholes and Insurance Most claims to insurance companies never get to the point of litigation. Indeed , the example presented above, Raymond Kelly’s house, is rare. Insurance companies pay many claims each year and, when challenged, they often choose to settle with homeowners rather than incur the expense of a legal challenge. But how did we get to the point that we are arguing subsurface subtleties in a court of law? Sinkhole coverage was first mandated in Florida in 1969. At the time, coverage was optional, although insurers were legislatively obligated to offer it (Salomone 1986). While many opted to get a sinkhole rider on their insurance, many property owners did not choose the rider and thus incurred losses when their property was damaged by sinkhole formation. In 1979, the legislature expanded the sinkhole insurance requirement by mandating sinkhole coverage for all homeowners. The language of the state statute regarding sinkhole insurance (State Statute 627.706) was as follows: 1. Every insurer authorized to transact property insurance in this state shall make available coverage for insurable sinkhole losses on any structure , including contents of personal property contained therein, to the extent provided in the form to which the sinkhole coverage attaches. 2. “Loss” means structural damage to the building. Contents coverage shall apply only if there is structural damage to the building. 3. “Sinkhole loss” means actual physical damage to the property covered arising out of or caused by sudden settlement or collapse of the earth supporting such property only when such settlement or collapse results from subterranean voids created by the action of water on limestone or similar rock formation. Florida Sinkholes: Science and Policy 162 4. Every insurer authorized to transact property insurance in this state shall make a proper filing with the office for the purpose...