(Photo by: I Am Janosik. Sinkholes are real. This one was near USF)
New legislation under consideration could substantially increase the risk exposure of Florida homeowners (and their mortgage providers). Below is an e-mail I sent to my state representatives, House Speaker and Senate President. I encourage you to do the same. Exercise democracy.
First, here are the links to the Florida House and Senate:
E-mailed message follows below:
Re: Vote Against HB 803 and Similarly CS/SB 408 (Sinkhole Coverage Subsections As-Is)
I am both a homeowner and a practicing professional engineer (geotechnical) in Florida (FL License No. 69825). As a homeowner, I am extremely disturbed by the implications that passage of the new sinkhole coverage provisions would have. I urge you to vote against these bills, as the language is currently drafted.
Brief recommended changes:
– Keep the current requirement that coverage for sinkhole activity be provided.
– Extend coverage for damage caused by sinkhole activity to include damage that may impede the function of a structure, in the judgment of the professional engineer. This type of damage is generally not severe “structural damage”, but it is more than cosmetic damage.
– Consider provisions to reduce litigation costs. Litigation is the major driver behind the increase in sinkhole claims. Allow engineers to be engineers.
My rationale for my recommendation to vote against these bills is provided below:
I still owe a great deal of money on my mortgage, and if these bills pass as-is, I would be in a dire situation if a sinkhole were to develop near the foundation of my home causing cracks up to 1/16-inch wide in the walls and floor slab. The legislative language states that insurance companies may (not shall – it would be optional per provider) provide coverage for sinkhole activity, making the likelihood of the above scenario being a covered loss very slim – it’s reasonable to estimate that most insurance carriers will drop coverage for sinkhole activity. So, let’s assume I have no sinkhole activity coverage because no one is willing to offer it to me, given the specifics of my situation, and since they are not directed to provide the option of coverage (I would like to see mandatory sinkhole activity coverage with an opt-in clause). Additionally, the above scenario of some cracks up to 1/16-inch wide would not constitute “structural damage” as defined in the proposed bill, so I would not be covered under the catastrophic collapse provision. So, who is stuck with the invoices to remediate my home from this Act of God? Me, of course.
It does not make sense to me why I can have coverage for some shingles blowing off my roof during a windstorm, but I can’t have coverage for some fairly substantial cracks (possibly up to 1/4-inch wide) due to a similar force of nature beyond my control. Those cracks could allow moisture intrusion and/or insect infestation, creating even greater problems. Some repair is necessary. And a geotechnical assessment would be recommended to provide the correct remediation recommendations. I wouldn’t recommend that John and Jane Doe patch the cracks without an evaluation by experienced structural and geotechnical engineers. That would not be prudent, and could put the structure at risk.
I understand that ballooning costs related to sinkhole activity remediation have been the catalyst for the introduction of these bills. Putting my engineer hat back on, I can say that the increase in costs appears related to litigation issues. Most of these litigation issues arise because of poorly drafted legislative language, as well as a bias against insurance companies by jurors. As a geotechnical engineer, I can perform a subsurface exploration and provide my professional judgment whether the damage to the home is or is not related to sinkhole activity or a sinkhole. However, it seems that no matter what the specifics of the project are, a civil suit against the insurance company can occur. The costs to pursue the issue in court usually exceed the insurance policy limits, and the matter is often settled out of court (sometimes for more than the insurance policy limit – it’s civil court, after all). So, there’s a Catch-22. The insurance company either needs to pay policy limits if there are even the slightest indications of sinkhole activity, or they risk having to pay quite a bit more in litigation no matter what the professional engineer’s findings.
The solution? Let professional engineers be professional engineers, without the hovering cloud of potential litigation looming large. Rather than asking the engineer if there is “sinkhole activity” (which is a construct of legislative language) and if that “sinkhole activity” caused damage to the home, ask the engineer “what has caused damage to the home” if there are indications that the damage could be related to sinkhole activity. Period. The engineer should then provide any applicable recommendations to repair the structure, which could include simple patching and painting. More detrimental soil conditions, including extremely loosened and vertically extensive soils emanating from the limestone surface (“sinkhole activity”), would warrant more extensive subsurface remediation. The specific recommendations should be on a case-by-case basis.
There is always the argument that engineers hired by insurance companies are not an unbiased third party. It’s a valid argument. You could also argue that engineers hired by the homeowner would not be unbiased. Perhaps, a third entity would be a possible solution. Similar to the Board of Professional Engineers, this Sinkhole Review Board would evaluate the data from both submitting engineers and provide a final binding ruling. The evaluation of structures and potential causes of damage are highly technical topics. A technical review board would better serve the public rather than the civil courts. I would assume most on the technical review board would be homeowners with similarly vested interests as any other homeowner (maintaining home values, safety, etc.).
There is a common sense median. The existing legislation is not it. The proposed legislation is not it.