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Second DCA Reaffirms Sinkhole Insurers’ Contractual Right to Withhold Payment for Subsurface Repairs Until the Policyholder Presents a Signed Contract for Those Repairs

August 1, 2016

Two new opinions show the Second DCA continues to hold that if an insurance policy providing sinkhole coverage authorizes the insurer to withhold payment for subsurface repairs until the policyholder presents a signed contract for those repairs, the insurer may abide the policy. See Citizens Property Ins. Corp. v. Duenas, 2D14-3858 (Fla. 2d DCA June 10, 2016); Citizens Property Insurance Corporation v. Stieben, no.2D-14-4412 (Fla. 2d DCA July 6, 2016). In both cases, the appellate court reversed judgments that required the sinkhole insurers to pay their policy proceeds directly to the policyholder without such a contract for the repairs in hand.

In 2011, the Florida Legislature waded deep into the regulation of adjusting insurance claims for sinkhole losses. One announced purpose was to assure that insurance payouts for sinkhole losses were used to repair sinkhole-damaged homes. Too many policyholders were pocketing insurance proceeds and walking away from the damaged properties. The Counties affected by sinkhole geology were being punished with unrepaired, stigmatized properties dragging on their tax rolls. The Legislature responded in 2011 by authorizing sinkhole insurers to withhold payment for damaged foundations until the homeowner presented a contract for the repair of the foundation – so long as the insurer includes such a provision in the policy.

Contact Anthony Russo at for details.