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Eleventh Circuit: Sinkhole Loss in Florida Must Impair the Property’s Structural Integrity to be Covered

Effective in 2005, Florida statutes defined “sinkhole loss” to mean “structural damage to the building, including the foundation, caused by sinkhole activity,” and they left the all-important term “structural damage” undefined.  Homeowner’s policies issued in the state employed that formulation until May 17, 2011, when Florida adopted a much narrower five-part definition of structural damage that applied to policies affording coverage for sinkhole loss, and many courts construing the 2005 language held that the term “structural damage” meant nothing more than “damage to the structure.”  Several weeks ago in Hegel v. First Liberty Ins. Corp., 778 F.3d 1214 (11th Cir., Feb. 27, 2015), a unanimous Eleventh Circuit panel held: (1) that defining structural damage to mean any “damage to the

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Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole

Florida Courts Differ On Whether The Undefined Term “Structural Damage” In A Sinkhole Case Should Be Given A Broad Or A Narrow Interpretation

Since 2005, Florida law has defined “sinkhole loss” as “structural damage to the building, including the foundation, caused by sinkhole activity.”  The term “structural damage” was long-undefined, however, leading numerous Florida courts to interpret that phrase broadly as meaning nothing more than “damage to the structure.”  In 2011, however, the Florida Legislature adopted a much narrower five-part definition of “structural damage” for application when construing policies affording coverage for sinkhole loss.  Fla. Stat. §627.706(2)(k) (2011).  The state’s federal courts have now split on the issue of whether that definition automatically applies to contracts of insurance issued after the statute’s effective date. The question came to the forefront in Juan Pinzon and Jaqueline Espitia v. The First Liberty Ins. Corp., 2013

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Posted in Sinkhole, Uncategorized
About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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