Florida Court Upholds OIR Position on Sinkhole Coverage

A Florida court has upheld a decision by state insurance regulators that property insurers must offer sinkhole loss coverage in an amount equal to the dwelling coverage limit.

Farm Bureau asked the Office of Insurance Regulation to approve an amendment to its endorsement form that would limit sinkhole loss coverage to 25 percent of the overall coverage amount. When OIR rejected the Farm Bureau request, the insurer turned to the courts.

The 1st District Court of Appeal said Wednesday that deductibles are tied to casualty coverage limits in the base policy, concluding the amount of sinkhole loss coverage is intended to be the same as the amount of coverage provided in that policy. Florida property insurers are required to provide catastrophic ground cover collapse in addition to optional sinkhole coverage.