Cheap Sinkhole Repairs Threaten Property Owners

On November 14, 2013, a sinkhole forced more families out of their homes in Dunedin, Florida.

Michael and Janie Dupre’s home was swallowed by a sinkhole early Thursday morning; however, the Dupres were aware of the sinkhole activity and already began remediating the condition before their home collapsed. The Dupres reported their sinkhole loss claim to Citizens Property Insurance Corporation. Citizens’ retained engineering company, HSA Engineers and Scientists, tested the home and confirmed sinkhole activity. HSA provided a grout only stabilization program. The Dupres obtained a second engineering opinion that included underpinning to stabilize the building. The carrier refused to pay for any repair other than the grouting program recommended by HSA.

Just forty-eight hours after the commencement of the grouting program, the Dupres’ home collapsed.

This incident is an opportunity for me to explain "preventative underpinning,” because it could have prevented this potentially tragic event.

Underpinning can be utilized to lift structures to repair structural damage to buildings. Another common use for underpinning is referred to as bypass underpinning. Bypass underpinning is utilized to bypass a problematic shallow soil zone beneath a structure like shallow clay, organics, and/or fill.
Finally, preventative underpinning is also commonly recommended. The purpose of preventative underpinning is to prevent additional damages from occurring to the structure during the grouting process. Why? Because before a property is grouted, long metal poles are drilled deep into the ground around the entire structure potentially aggravating the sinkhole.

Combine weak shallow soil and active raveling from sinkhole activity and you have a serious problem. Under these circumstances, engineers commonly recommend underpinning the structure before grouting is implemented.

This recent sinkhole event is an example of why preventative underpinning is recommended. If the structure was stabilized before the grouting, maybe the Dupres’ would still be safe in their home.

Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

Serving Florida since 1964

Sinkhole ‘Structural Damage’ Definition Sliding in Insurers’ Favor

In 2005, the legislature enacted Section 627.706, requiring that insurers provide coverage for “structural damage” caused by sinkhole activity.  The legislature, however, failed to define “structural damage.”  Naturally, some insurers and insureds differed on their interpretation.  In 2011, the legislature provided a definition, as described in more detail below.  Since then, the majority of courts held that “structural damage” means “damage to the structure;” however, two recent federal opinions differ.

An ongoing debate in sinkhole claims and litigation is whether the legislature intended for Florida insurers to provide coverage for sinkhole activity that causes aesthetic damage only.

In September 2013, in the cases of Erasmo and Maria Gonzalez v. Liberty Mutual and Robert and Patricia Bonitch v. Liberty Mutual, two Middle District of Florida judges held that “structural damage” does not mean “damage to the structure.”  Although the judges provided slightly different meanings for “structural damage,” each opinion is properly characterized as requiring that sinkhole activity cause damage that impairs the ability of the property to be structurally sound.

A closer look at the orders shows a slight variation in how the Gonzalez and Bonitch courts defined “structural damage.” Despite this variation, it is worth noting that both definitions require the insured to show that sinkhole activity has compromised the home’s structural integrity:

Gonzalez: “Damage to a part, material, or assembly of the building that affects the stability of the building or that supports a dead or designed live load, and the removal of which part, material, or assembly could be expected to cause a portion of the building to collapse or fail.”

Bonitch: “Damage that impairs the structural integrity of the building.”

As a result of these orders, insurers and insureds may consider consulting with their engineering experts to assess the potential effect on the coverage permitted for their claims.  Engineers will need to examine all of the damage – floor movement; cracking to floors, walls, and ceilings; and separation of materials. Experts will likely shift some of their focus from the subsurface soil conditions to the building, and thus engineers should be armed with calculations and explanations for why the damage fits the definition of “structural damage.”

The impact of these cases is highly debatable.  Although a complete review of the legislative history and case law is outside the scope of this article, it is important to note the following.  Most insurers did not have a definition of “structural damage” in their policies because the legislature did not provide one until 2011. The 2011 definition of “structural damage” is a highly technical, five prong approach to evaluating whether the property’s load bearing capacity has been compromised and whether the property is in danger of collapsing.  Following the announcement of the 2011 statutory definition for “structural damage,” many insurers amended their sinkhole loss coverage to incorporate the definition. Accordingly, the Gonzalez and Bonitch orders appear to reflect an analysis of policies from the 2006 to 2011 timeframe that did not contain a definition for “structural damage.” At this time, the majority of the pending lawsuits arise from policies written during 2006 to 2011, and therefore, the Gonzalez and Bonitch orders are relevant to much of the current litigation. 

Nevertheless, if there is a new claim and the relevant policy has been amended to incorporate the 2011 definition of “structural damage,” then these cases are immaterial.  Further, please also note that the Gonzalez and Bonitch orders are from federal district courts and are not yet binding precedent.  With this context, it should be easier to understand the overall impact of the orders, and to be aware of the potential shift in how courts might present these claims to a jury.

Contact us for all your Insurance needs! (321)725-1620

Bob Lancaster Insurance

Serving Florida since 1964