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Sinkhole Coverage… A New Beginning

By June 23, 2016June 9th, 2020Homeowners

We at Insurance Resources are happy to announce that on April 6, 2016, Governor Rick Scott signed into law Senate Bill 1274 which will go into effect on July 1, 2016 and will allow Florida insurance companies the ability to offer a new type of residential sinkhole coverage.

In 2007 Florida Homeowner’s carriers in the state of Florida started to see an uptick in the number of sinkhole claims. Over the next few years, sinkhole losses became the number one loss for many Florida carriers. Unfortunately, many of these claims were frivolous, including claims for normal settlement and sidewalk cracks.

In 2011, as a result of the increasing insurer claims, legislation passed allowing insurers to exclude Sinkhole coverage as long as they offered “Catastrophic Ground Collapse” coverage. Catastrophic Ground Collapse (which is less broad than Sinkhole coverage) only protects against abrupt collapse of ground cover which is visible to the naked eye, and the resulting structural damage to the building including the foundation.

As a by-product of the 2011 legislation almost all carriers in the state began to exclude Sinkhole coverage and began offering only Catastrophic Ground Collapse coverage. Sinkhole remained available from most carriers, but required expensive testing to be done. Even if testing was paid for by the consumer, there was still a great chance that the report would not pass underwriting review.

The new 2016 legislation will allow insurance companies to offer (at their option) coverage for structural damage to the covered building, including foundation, caused by sinkhole activity. The new coverage will be subject to the statutory requirements for sinkhole insurance in the the Florida Statutes, with the following exceptions:

  • Coverage is only available of personal lines residential coverage
  • Coverage may be limited to repairs to stabilize the building and repair the foundation
  • Insurers are not required to offer coverage for Contents or Additional Living Expense
  • Citizens Property Insurance Company cannot issue this insurance
  • Insured and the insurer can agree on the deductible
  • Limits less than $50k are prohibited unless that amount excess the full replacement cost of the property
  • Insured must sign special notices stating they understand the limits and deductibles of the policy

Insurers that wish to provide coverage, must file a plan of operation and financial projections or revisions to the proposed plan.

We urge you to contact your agent or Brian Ford at if you wish to see if your current carrier will be offering coverage at renewal.