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How Insurance Companies Offer to Settle Sinkhole Lawsuits
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About 2,100 customers who have or are planning to sue their insurance company over sinkhole claims will soon be getting offers to settle.
The state-run company announced Wednesday it is mailing proposals to current and potentially future litigants this week that offer to pay for repairs. But there are strings attached, including a requirement that customers will no longer be paid to make the necessary repairs. Instead, the insurance company will pay the contractor directly.
Dubbed “Grout in the Ground”, the proposal is part of an effort to settle sinkhole claims, as well as avoid future risk. The letter invokes recent sinkhole mishaps in Seffner, Clermont and Dunedin to encourage customers to agree to settle.
“While we recognize that these events are extremely rare occurrences, the insurance companies primary goal is making you and your family safe immediately,” the letter stated.
If homeowners accept the offer, they must drop their lawsuits against the insurance company, agreeing to pay their own legal bills and fees.
“This is an attempt to see if we can settle some of these cases,” said insurance company spokesman Michael Peltier. “It’s been our policy not to write blank checks. This is an expansion on that.”
Sen. Wilton Simpson, R-Trilby, represents parts of Pasco and Hernando that are susceptible to sinkholes. He hailed the settlement offer, which he encouraged in meeting with the insurance company officials, as a practical way to reduce litigation costs while providing customers with the coverage they need.
“What we’re trying to do is get the homes properly repaired,” Simpson said. “That’s the primary concern. This is the right way to do it. There’s no downside at all in this plan.”
Simpson said too many customers spent claims money on other expenses or didn’t spend the money at all, making the homes vulnerable for themselves or for those who buy the homes later.
Frequent insurnace company critic and former state lawmaker Mike Fasano, who is now the Pasco tax collector, said he was happy to hear that the company will require that the money be spent on repairs.
But he questioned the chosen method of repair: grouting. He said grouting is more expensive than other methods, such as pinning.
“This will cost the insurance company a fortune,” Fasano said. “Grouting is expensive. Companies will pour cement just to meet the total cost of the claim. They’ll grout until the cows come home in some cases.”
Lawyers like Dan Fritz, who represent homeowners against insurance companies, say the latest offer was an insincere one.
“The insurance company is the only insurance company in Florida that is forcing homeowners to put ‘grout in the ground,’ which is what they were doing in Dunedin when the collapse occurred,” said Fritz, general counsel at Sinkhole Public Adjusting LLC in New Port Richey. “They has a strategy which appears to disregard their customer’s best interests. We saw them send out a similar letter after the Seffner tragedy, so it doesn’t look like a serious offer.”
