Article Courtesy of The Sun Coast News
NEW PORT RICHEY - Sinkhole damage claims are so abused they have become a bit of a game of chance offering a big jackpot, state and Pasco County leaders argue.
They say state laws governing these claims need an overhaul.
"We've got to stop the blue-collar lottery," Greg Armstrong, a former president of the West Pasco Board of Realtors, said Tuesday. He was paraphrasing a remark made by state Sen. Mike Fasano, R-New Port Richey, at a Nov. 15 Florida Realtors sinkhole symposium in Tallahassee.
About $1.4 billion has been paid in claims since 2006, Armstrong said. Only one home in the entire state has been condemned from sinkhole problems which made the house unlivable, Armstrong said.
Insurance companies sometimes simply pay a sinkhole claim to avoid going to court, Armstrong said. "Who is a jury going to believe, the homeowner or the big, bad insurance company?"
Or an insurance policy might pay far more than a house is worth if a sinkhole claim is filed.
Repairs may never be done in other instances, Armstrong added. At the other extreme, a sinkhole contractor can be obliged to continue any repairs no matter how high costs might soar above the original estimate.
"It's a snowball problem," Armstrong said.
Fasano describes it as a "domino effect" on neighborhood property values, according to Greg Giordano, Fasano's chief legislative assistant. Fasano on Tuesday was appointed as a member to the Senate Banking and Insurance Committee, which will consider changes to state law on sinkhole claims in 2011.
Natural settlement can cause very common cracks, Giordano observed. A sinkhole is difficult to prove or disprove. Contractors are "preying on people's fears," Giordano said.
Fasano recently got an advertisement in the mail with an offer to check for cracks in the foundation of his house.
Armstrong asked Property Appraiser Mike Wells to detail the situation in Pasco. On Monday, Wells responded with a lengthy letter on the issue to Katherine Emrich, chief counsel for the Florida Senate. Emrich is compiling research that will guide Florida House and Senate members in writing legislation in 2011.
The number of sinkholes in Pasco that have been stabilized stands at 3,069, according to Property Appraiser's Office records. The impact on property values amounts to $13,931,572.
If a sinkhole has not been repaired but the structure is habitable, the market value for the land and building takes a 30 percent hit, according to Wells.
The "abuses we see," Wells wrote, include conflicting reports when a claim is first investigated. One firm might conclude there is no sinkhole, while only a week or two later another will say there is a sinkhole on the same property.
Wells suggests a sliding damage payment scale that would be based on the impact of a sinkhole. For instance, a payment for minimal repairs would be capped at 20 percent of the replacement cost of a home. Only condemned structures would qualify for a 100 percent replacement cost payout.
Wells would base it on the amount of sag of the foundation or foundation crack size. He would exclude inadequate foundations that did not meet building codes at time of construction.