Action 9 breaks down Florida sinkhole insurance coverage

ORLANDO, Fla. — Despite big changes to sinkhole insurance, the kind of destruction caused by Lake County's Summer Bay resort collapse is still covered, according to Action 9's Todd Ulrich.

Far more homeowners have sinkholes that don't destroy property but still cause extensive damage.

A catastrophic collapse is now the only sinkhole damage now fully covered in Florida since the legislature approved sweeping insurance changes last year.

Under the new law, there must by an abrupt land collapse, structural damage and a condemned property.

Insurance experts told Action 9 Summer Bay's policy should cover the company's loss and prevent special assessments against timeshare owners.

But for traditional homeowners, many sinkhole claims are now nightmares.

At Sheryl Smith's Marion County home, the foundation cracked wide open, doors would not close and walls split from ceilings, but her insurance claim was turned down despite an engineering report that identified catastrophic failure.

Many insurance adjustors said the new law gives insurance companies an easy way to deny, delay and limit claims.

"They will fight you on the methods of repair so they can keep it cheap and the cosmetics above ground," said Smith.

Smith said she was tired of fighting and agreed to a settlement that left her with a $70,000 loss she blames on the sinkhole and Florida's new insurance rules.

"It should be covered or why have it?" she said.

The law was changed because the state found contractors and adjustors abused coverage for minor repairs.

Florida does have a mediation program to review sinkhole claim denials.

WFTV