Property Insurance Watch: Florida Appeals Court Overturns Trial Court in Sinkhole Claim

On August 16th, 2017, Florida’s Second District Court of Appeal overturned a lower court decision in the case of Omega Insurance Company v. Wallace. The proceedings involved a dispute over exactly what type of repairs the insurance company had to make after a Florida property suffered major sinkhole damage. Here, our experienced Fort Lauderdale property insurance lawyers discuss this ruling.

Case Analysis: Omega Insurance Company v. Wallace

Background

In 2010, the Wallaces brought an insurance claim for the substantial sinkhole damage that occurred on their property. At the time, they had coverage under a policy that was offered by Omega Insurance Company. The policy in question explicitly stated that damage directly caused by a sinkhole would be covered. Indeed, the specific clause within the sinkhole provision noted that the following damage would be covered:

• The costs to stabilize the land and building; and
• The costs to repair the foundation.
  

The Dispute

While there was no question that the insurance policy offered coverage for sinkhole damage, a fierce dispute arose over what exactly was covered. To be more specific, the dispute centered around whether or not what was the appropriate method for the subsurface repair. This is a relatively common issue, and it leads to many sinkhole damage disputes. Notably, the Wallaces procured an expert that determined that an extensive $200,000 underpinning repair was needed on the grounds of their residential property. However, Omega’s engineering expert disagreed with this assessment. A neutral evaluator was brought in, and that evaluator agreed that the $200,000 repair was not necessary. Coverage for that specific repair was denied, and the Wallaces responded by filing a lawsuit.

The Court Decision

After hearing the arguments from each side, a lower court awarded coverage to the homeowners. This decision was made on the grounds that the court interpreted the insurance policy in a very particular manner. The homeowners made a technical argument, that under the contract language, only their expert engineer followed the proper protocols when analyzing the damage. As such, their engineer’s recommendation that a $200,000 underpinning repair was required should hold as the only relevant evaluation ever conducted in this case.

On appeal, the Second District Court overturned that ruling. The appeals court interpreted the responsibilities in the policy in a more broad manner, concluding that the insurer’s engineer and the neutral evaluator both followed the proper protocols after all. As a result of their reasoning, the appeals court determined that there is still a legitimate dispute at issue in this case. The question of whether or not underpinning would be required is one that would need to be heard again, and decided by a Florida jury.

Get Property Insurance Help in South Florida

If your property insurance claim was denied, please call us today at (954) 990-5251 to schedule a no-fee review of your case. At Geyer Fuxa Tyler, our firm handles property insurance claims throughout Broward County, including in Hallandale Beach, Lauderhill, Tamarac, Oakland Park and Wilton Manors.

Resource:

2dca.org/opinions/Opinion_Pages/Opinion_Pages_2017/August/August%2016,%202017/2D16-449.pdf