The confusion behind Florida’s new property insurance law, SB 408, may have had a strange effect on the outcome of the Seffner sinkhole incident. While unlikely, it is possible that the insurance company could have refused to cover damage to the Seffner house because the damage did not fit neatly under the definitions included in SB 408. Given the scope of the tragedy and the public scrutiny, there little chance that the insurance company would have attempted to deny the claim; however, some claims, in which catastrophic damage has occurred, have been denied. In the photo below, an SUV has fallen inside the sinkhole and the house itself is just inches from the rim of the sinkhole. The insurance company initially denied the claim because the damage was not considered “severe enough.”
The root of the controversy regarding the Seffner home began with a quote in a recent article by prominent insurance litigation attorney, Ted Corless. Mr. Corless said that he had spoken to three engineers who were involved in the Seffner incident. The engineers had stated that “under the new definition of what constitutes a sinkhole loss,” the Seffner house would have been excluded because “the four walls remained but the foundation dropped.” Damage to the slab — according to the engineers — was not covered.
To get some clarity, I spoke to Ralph Meder, geologist, at MCD of Central Florida. Ralph’s immediate reaction was that damage to the slab would be covered under the conditions found at the Seffner house. That said, however, after reading the article, Ralph was reminded of a claim in which a 50 ft. wide and 45 ft. deep sinkhole opened up between two houses. There was no structural damage to the homes on either side of the sinkhole and SPT borings didn’t indicate any soil instability. The insurance company denied the claim leaving the homeowners to foot the bill for the sinkhole repair.
According to attorney Ted Corless, one of the tactics used by some engineering firms who fight sinkhole claims, is to state that, “the structural members of the home do not include the slab. Specifically, these engineering firms are taking the position that damage to the home must meet the criteria of sinkhole loss under the definitions contained in Section 627.706. In their analysis, this does not include the slab because the slab does not constitute a portion of the “load bearing” structure.”
If you remember video footage and photos of the Seffner house, there was no indication of sinkhole damage inside or outside of the house. In one small room, was the mouth of the sinkhole, but all the walls were standing. Ted Corless went on to say, “In the Seffner home, portions of the slab literally fell into the ground, and because of that, the “load bearing” members of the system were not impacted. The house did not meet the strict definition of “structural loss.” Because of that discrepancy, it is possible that the engineers and insurers could have claimed “that the home has not reached a threshold necessary to fit into their definition of sinkhole loss.”
Ultimately, according to Ted Corless and many others, the confusion surrounding SB 408 — even among experts — is the direct result of a law that was written by “attorneys and insurance lobbyists,” rather than geotechnical engineers and geologists.
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