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Clarification on sinkhole repairs could impact coastal residents

On Behalf of | Aug 14, 2015 | Insurance Law

If you live on the coast in Florida, you are likely quite familiar with the environmental factors that can damage your home. There are threats of strong winds, hurricanes and flooding that can lead to extensive damage for which you may be financially responsible. 

Too many people make the mistake of thinking that as long as they have insurance they are covered and will not be left to take on the massive costs of repairing a home caused by these factors. However, this can be a dangerous — and costly — assumption. For example, if your home has been damaged by sinkholes but you don’t have code upgrade coverage, you could end up having to pay huge sums of money to get your home or building up to code.

A recent clarification by the State of Florida’s Division of Emergency Management and the Federal Emergency Management Agency could have a dramatic impact on the number of homeowners required to perform these substantial improvements to homes damaged by sinkholes.

According to this press release, a building damaged by a sinkhole could require substantial repair depending on how much of the damage is determined to be directly associated with the sinkhole. The agencies further clarified that subsurface compaction grouting would count toward the damage determination, as there was question of this based on the fact that the grouting does not touch the building.

What this means for homeowners in designated flood areas of Florida is that the cost of repairing a home could be high enough that they would be required to perform extensive repairs to be in compliance with FEMAs Substantial Damage Rule, or 50% Rule. When the cost of repairing a home damaged by sinkholes is higher than 50 percent of the value of the building, the building must be rebuilt so that the ground floor is elevated at least 10 feet.

Homeowners should be aware that insurance may not cover the expense of bringing a home up to code unless they have this specific coverage as part of their policy. Any homeowner with questions or concerns about the protections they may or may not have in place would be wise to review their policies with an attorney who can spot potential problems and help homeowners understand how they can protect themselves.