(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell will be writing on sinkhole issues).
Most homeowner policies in Florida are "all risk" policies, which means the peril that caused the damage is covered unless specifically excluded in the policy. Generally, to defeat coverage under an "all risk" policy, an insurance company must prove that a specifically excluded peril caused all of the damage.
In the event of a sinkhole, insurance companies typically rely on the "settlement of loose, sandy soils" and "concrete shrinkage and bulging" exclusions in denying coverage. In order to prevail, the insurance company must prove that the excluded event; i.e. the settlement of loose, sandy soils and/or the shrinking or bulging of materials caused ALL of the damage to a residence.
Even if sinkhole activity is not affirmatively found in the SPT borings that are done on the property, if sinkhole activity cannot be ruled out as a cause OR contributing cause of all OR part of the damage, there is coverage for the loss. Simply stated, if sinkhole cannot be ruled out as one of the possible causes contributing to some of the damage to the house, there is coverage.
All a homeowner has to prove at trial is that there was a loss to the property during the policy period and that there was resulting damage. The homeowner does not have to prove that there is coverage; i.e. prove that there is a sinkhole on the property. Rather, the carrier has to prove that sinkhole can be ruled out completely even as a possible contributing cause to some of the damage. If the carrier cannot meet it’s burden, there is coverage under the policy for the loss.
Here are sample jury instructions (click on the image to view):
