Florida Sinkhole Statutes
Residential Coverage Type (Sinkhole Coverage): Florida Statute 627.706 requires every insurer authorized to sell property insurance to provide coverage for catastrophic ground cover collapse and shall make available, for an additional premium, coverage for sinkhole losses on any structure, including contents of personal property contained therein, to the extend provided in the form to which the coverage attaches. A policy for residential property insurance may include a deductible amount applicable to sinkhole losses equal to 1 percent, 2 percent, 5 percent, or 10 percent of the policy dwelling limits, with appropriate premium discounts offered with each deductible amount. A sinkhole loss means structural damage to the building, including the foundation, caused by sinkhole activity. Contents coverage shall apply only if there is structural damage to the building caused by sinkhole activity.
The 2010 Florida Statutes (including Special Session A) - Title XXXVII INSURANCE Chapter 627 INSURANCE RATES AND CONTRACTS
627.706 Sinkhole insurance; catastrophic ground cover collapse; definitions.
(1) Every insurer authorized to transact property insurance in this state shall provide coverage for a catastrophic ground cover collapse and shall make available, for an appropriate additional premium, coverage for sinkhole losses on any structure, including contents of personal property contained therein, to the extent provided in the form to which the coverage attaches. A policy for residential property insurance may include a deductible amount applicable to sinkhole losses equal to 1 percent, 2 percent, 5 percent, or 10 percent of the policy dwelling limits, with appropriate premium discounts offered with each deductible amount.
(2) As used in ss. 627.706-627.7074, and as used in connection with any policy providing coverage for a catastrophic ground cover collapse or for sinkhole losses:
(a) "Catastrophic ground cover collapse” means geological activity that results in all the following:
- The abrupt collapse of the ground cover;
- A depression in the ground cover clearly visible to the naked eye;
- Structural damage to the building, including the foundation; and
- The insured structure being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure.
Contents coverage applies if there is a loss resulting from a catastrophic ground cover collapse. Structural damage consisting merely of the settling or cracking of a foundation, structure, or building does not constitute a loss resulting from a catastrophic ground cover collapse.
(b) "Sinkhole" means a landform created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater. A sinkhole may form by collapse into subterranean voids created by dissolution of limestone or dolostone or by subsidence as these strata are dissolved.
(c) "Sinkhole loss" means structural damage to the building, including the foundation, caused by sinkhole activity. Contents coverage shall apply only if there is structural damage to the building caused by sinkhole activity.
(d) "Sinkhole activity" means settlement or systematic weakening of the earth supporting such property only when such settlement or systematic weakening results from movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation.
(e) "Professional engineer" means a person, as defined in s. 471.005, who has a bachelor's degree or higher in engineering with a specialty in the geotechnical engineering field. A professional engineer must have geotechnical experience and expertise in the identification of sinkhole activity as well as other potential causes of damage to the structure.
(f) "Professional geologist” means a person, as defined by s. 492.102, who has a bachelor’s degree or higher in geology or related earth science with expertise in the geology of Florida. A professional geologist must have geological experience and expertise in the identification of sinkhole activity as well as other potential geologic causes of damage to the structure.
(3) On or before June 1, 2007, every insurer authorized to transact property insurance in this state shall make a proper filing with the office for the purpose of extending the appropriate forms of property insurance to include coverage for catastrophic ground cover collapse or for sinkhole losses. Coverage for catastrophic ground cover collapse may not go into effect until the effective date provided for in the filing approved by the office.
(4) Insurers offering policies that exclude coverage for sinkhole losses shall inform policyholders in bold type of not less than 14 points as follows: “YOUR POLICY PROVIDES COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE, YOUR POLICY DOES NOT PROVIDE COVERAGE FOR sinkhole LOSSES. YOU MAY PURCHASE ADDITIONAL COVERAGE FOR sinkhole LOSSES FOR AN ADDITIONAL PREMIUM.”
(5) An insurer offering sinkhole coverage to policyholders before or after the adoption of s. 30, chapter 2007-1, Laws of Florida, may nonrenew the policies of policyholders maintaining sinkhole coverage in Pasco County or Hernando County, at the option of the insurer, and provide an offer of coverage to such policyholders which includes catastrophic ground cover collapse and excludes sinkhole coverage. Insurers acting in accordance with this subsection are subject to the following requirements:
(a) Policyholders must be notified that a nonrenewal is for purposes of removing sinkhole coverage, and that the policyholder is still being offered a policy that provides coverage for catastrophic ground cover collapse.
(b) Policyholders must be provided an actuarially reasonable premium credit or discount for the removal of sinkhole coverage and provision of only catastrophic ground cover collapse.
(c) Subject to the provisions of this subsection and the insurer’s approved underwriting or insurability guidelines, the insurer shall provide each policyholder with the opportunity to purchase an endorsement to his or her policy providing sinkhole coverage and may require an inspection of the property before issuance of a sinkhole coverage endorsement.
(d) Section 624.4305 does not apply to nonrenewal notices issued pursuant to this subsection.
History.—s. 2, ch. 81-280; s. 809(2nd), ch. 82-243; s. 79, ch. 82-386; s. 114, ch. 92-318; s. 8, ch. 2000-333; s. 1189, ch. 2003-261; s. 17, ch. 2005-111; s. 25, ch. 2006-12; s. 30, ch. 2007-1; s. 1, ch. 2009-178.
The 2010 Florida Statutes (including Special Session A) - Title XXXVII INSURANCE
Chapter 627 INSURANCE RATES AND CONTRACTS
627.707 Standards for investigation of sinkhole claims by insurers; nonrenewals.
Upon receipt of a claim for a sinkhole loss, an insurer must meet the following standards in investigating a claim:
(1) The insurer must make an inspection of the insured’s premises to determine if there has been physical damage to the structure which may be the result of sinkhole activity.
(2) Following the insurer’s initial inspection, the insurer shall engage a professional engineer or a professional geologist to conduct testing as provided in s. 627.7072 to determine the cause of the loss within a reasonable professional probability and issue a report as provided in s. 627.7073, if:
(a) The insurer is unable to identify a valid cause of the damage or discovers damage to the structure which is consistent with sinkhole loss; or
(b) The policyholder demands testing in accordance with this section or s. 627.7072.
(3) Following the initial inspection of the insured premises, the insurer shall provide written notice to the policyholder disclosing the following information:
(a) What the insurer has determined to be the cause of damage, if the insurer has made such a determination.
(b) A statement of the circumstances under which the insurer is required to engage a professional engineer or a professional geologist to verify or eliminate sinkhole loss and to engage a professional engineer to make recommendations regarding land and building stabilization and foundation repair.
(c) A statement regarding the right of the policyholder to request testing by a professional engineer or a professional geologist and the circumstances under which the policyholder may demand certain testing.
(4) If the insurer determines that there is no sinkhole loss, the insurer may deny the claim. If the insurer denies the claim, without performing testing under s. 627.7072, the policyholder may demand testing by the insurer under s. 627.7072. The policyholder’s demand for testing must be communicated to the insurer in writing after the policyholder’s receipt of the insurer’s denial of the claim.
(5)(a) Subject to paragraph (b), if a sinkhole loss is verified, the insurer shall pay to stabilize the land and building and repair the foundation in accordance with the recommendations of the professional engineer as provided under s. 627.7073, and in consultation with the policyholder, subject to the coverage and terms of the policy. The insurer shall pay for other repairs to the structure and contents in accordance with the terms of the policy.
(b) The insurer may limit its payment to the actual cash value of the sinkhole loss, not including underpinning or grouting or any other repair technique performed below the existing foundation of the building, until the policyholder enters into a contract for the performance of building stabilization or foundation repairs. After the policyholder enters into the contract, the insurer shall pay the amounts necessary to begin and perform such repairs as the work is performed and the expenses are incurred. The insurer may not require the policyholder to advance payment for such repairs. If repair covered by a personal lines residential property insurance policy has begun and the professional engineer selected or approved by the insurer determines that the repair cannot be completed within the policy limits, the insurer must either complete the professional engineer’s recommended repair or tender the policy limits to the policyholder without a reduction for the repair expenses incurred.
(c) Upon the insurer’s obtaining the written approval of the policyholder and any lienholder, the insurer may make payment directly to the persons selected by the policyholder to perform the land and building stabilization and foundation repairs. The decision by the insurer to make payment to such persons does not hold the insurer liable for the work performed.
(6) Except as provided in subsection (7), the fees and costs of the professional engineer or the professional geologist shall be paid by the insurer.
(7) If the insurer obtains, pursuant to s. 627.7073, written certification that there is no sinkhole loss or that the cause of the damage was not sinkhole activity, and if the policyholder has submitted the sinkhole claim without good faith grounds for submitting such claim, the policyholder shall reimburse the insurer for 50 percent of the actual costs of the analyses and services provided under ss. 627.7072 and 627.7073; however, a policyholder is not required to reimburse an insurer more than $2,500 with respect to any claim. A policyholder is required to pay reimbursement under this subsection only if the insurer, prior to ordering the analysis under s. 627.7072, informs the policyholder in writing of the policyholder’s potential liability for reimbursement and gives the policyholder the opportunity to withdraw the claim.
(8) No insurer shall nonrenew any policy of property insurance on the basis of filing of claims for partial loss caused by sinkhole damage or clay shrinkage as long as the total of such payments does not exceed the current policy limits of coverage for property damage, and provided the insured has repaired the structure in accordance with the engineering recommendations upon which any payment or policy proceeds were based.
(9) The insurer may engage a professional structural engineer to make recommendations as to the repair of the structure.
History.—s. 1, ch. 92-146; s. 4, ch. 93-401; s. 19, ch. 2005-111; s. 26, ch. 2006-12.
Building code effectiveness grading schedule.
Database of information relating to sinkholes; the Department of Financial Services and the Department of Environmental Protection.
Standards for investigation of sinkhole claims by insurers.
Testing standards for sinkholes.
Alternative procedure for resolution of disputed sinkhole insurance claims.