Recently, Florida Governor Rick Scott signed Senate Bill 1274 into law. The new law goes into effect on July 1, 2016, and will let Florida insurance companies offer a new type of limited sinkhole insurance coverage. The bill is a response to a 2011 law that had some unintended consequences. Florida homeowners will now be able to purchase additional sinkhole protection this coming July.

The Current Law is too Restrictive

In 2011, Florida legislators believed that too many sinkhole damage claims were being made over minor issues. In response, a law was passed that restricted the ability of homeowners to recover compensation for minor to moderate sinkhole damage. Under the 2011 law, property owners could only recover for sinkhole damage in cases where the effects of the damages were catastrophic. Unfortunately, this piece of legislation proved to be far too restrictive. While homeowners could recover for major sinkhole damage, such as a house being totally destroyed, recovering for a cracked floor or wall became extremely difficult. Too many homeowners were being denied the ability to recover for moderate foundation damage. Senate Bill 1274 will attempt to fix the problems created by the 2011 sinkhole insurance reforms.

Elements of New Sinkhole Policies

Sinkholes are disproportionately prevalent in Florida. According to the United States Geological Survey (USGS), the state leads the nation in sinkhole damage risk. Of course, not all sinkhole damage is catastrophic. The new sinkhole damage legislation opens the market for new property insurance policies that allow for the recovery for sinkhole losses, even if the damage is short of catastrophic. According to the text of the bill, any new sinkhole damage policies must comply with the following standard:

• Policies can only be made available for residential coverage. Any commercial property should be excluded from new policies created under this legislation;
• The term “sinkhole loss” will be defined using Florida 627.706(2)(j). This means that it only includes damage related to the structure or foundation of the building in question;
• The policy limit must be at least $50,000, unless the full cost of the covered property is lower than that amount; and
• Citizens Property Insurance Corporation may not issue this type of limited sinkhole coverage.

Citizens Property Insurance Company is a not-for-profit insurer that is subject to some different standards than other insurers. Still it is expected that several insurance companies will offer limited sinkhole policies once the legislation goes into effect in July. Since Florida homeowners are at a much higher risk for sinkhole property damage, it may make sense to consider purchasing this type of coverage.

Contact Our Office Today

The property insurance attorneys at Geyer Fuxa Tyler have extensive experience handling a wide array of Florida property damage issues. Our firm works aggressively to ensure that you are being treated fairly by the insurance company. If you have questions about sinkhole damage or other types of property damage in Fort Lauderdale or Broward County, please call our office today at (954) 990-5251 to set up a legal consultation.