Shelton v. Liberty Mutual Fire Insurance Co.

A recent Federal case issued by the 11th Circuit Court has narrowed sinkhole claims immensely in the State of Florida. The facts of the case are as follows.

The Sheltons’ possessed a homeowner’s insurance policy issued by Liberty Mutual Fire Insurance Company. The policy was renewed in July 2011 and the Sheltons’ home was subsequently affected by a sinkhole. They filed a claim with Liberty for sinkhole damage in January of 2012. Liberty’s inspector went to the property and found cosmetic but not structural damage. The Sheltons’ claim was denied under a Florida statute which defined sinkhole loss as “structural damage to the building, including the foundation”. The statute has been revised two times in the last ten years. The first revision added the term structural damage and the second defined the term further. According to the latest definition, structural damage means “interior floor displacement”, “foundation displacement or defection”, “listing, leaning or buckling of exterior load bearing walls”, that the structure was “significantly likely to imminently collapse” and/or “substantial structural damage as defined in the Florida Building Code”. The insurer found that the damage to the Sheltons’ home did not fall within this definition.

The Shelton’s appealed the denial claiming that the policy did not refer to the statute and that since they had just renewed the policy, they should have been notified of the change in terms. The plaintiffs wanted the term structural damage to be defined according to its plain meaning and not as enumerated in the statute, as repairs to the home were estimated by an expert witness to cost over $100,000. The trial court agreed with the Shelton’s and awarded them damages. Unfortunately for the Shelton’s, Liberty appealed the decision and the Eleventh Circuit agreed with the insurer. The court found that the statutory definition of “structural damage” was incorporated into the policy, even if not expressly set forth in the policy, and applied to the Shelton’s loss.

The property insurance law is constantly changing and evolving and that is why it is important to contact an experienced attorney if you have a sinkhole claim. Call Tampa, Florida attorney Jeff Pekar for a free initial consultation today.