Appeals Court Ruling Protects Insurers

In an opinion filed March 13, 2013, the First District Court of Appeal in Florida found that Florida Farm Bureau Insurance could not drastically reduce coverage for sinkholes. The case was brought to the Court upon Florida Farm Bureau's appeal of the Office of Insurance Regulation's ruling regarding the proposed limits on coverage that the insurance company wanted to pay for sinkhole claims.

Florida Farm Bureau proposed that their coverage of sinkhole losses should be limited to 25 percent of the overall coverage amount of the home. This reduction in coverage, if allowed, would have severely hindered homeowners who attempted to have their sinkhole losses repaired. I've found that in most confirmed sinkhole cases, the amount needed to repair the home greatly exceeds 25 percent of the overall insurance coverage. In fact, the laws in Florida regarding sinkhole coverage include language that requires an insurance company to pay policy limits to a homeowner if the cost to repair a sinkhole damaged home exceeds the policy limits of the homeowners insurance policy.

Florida Statutes 627.707(5) reads, in important part, "...if the insurer's professional engineer determines that the repair cannot be completed within policy limits, the insurer must pay to complete the repairs recommended by the insurer's professional engineer or tender the policy limits to the policyholder."

Thankfully, this attempt by Florida Farm Bureau Insurance to limit their exposure to paying homeowners when they find a sinkhole on their property was denied by the appeals court.