Quote:
Originally Posted by Steve9930
I also found an insurance broker who could get me Sink Hole Coverage. His comments was He would not recommend it. And here is why. Most sink hole policies you can get now have a deductible of 10% of the value of the house. If your house is worth $250K that is $25K out of your pocket. His statement was if it cost that much to fix the problem you probably would be covered under the Catastrophic Ground Collapse.
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Dont kid yourself. Up north we had
minor underpinning done to our house and the cost was well over $15K. Boreholes and underpinning is a very expensive process...especially if you are having the entire foundation done.
Here in Florida here is how the fraud perpetuated, a home owner would call a sink hole company up and say we have a sinkhole. They would advise the homeowner to contact the insurance company. The insurance company would say homeowner you pay for the borehole(s) ($5-10 K depending upon how many) to prove it is a sinkhole, and if it is we will reimurse you for the drilling cost PLUS the cost to repair (minus your $500 deductible) if it is determined "Sinkhole Activity" is the main cause for the cracks in your walls or the separations in your foundation.
For a $250K house it was not uncommon to get estimates to repair between $150 -200K. In many cases it would be a total loss for the insurance comapny and they would write lets say $200K. Of course the homeowner did not want to move back in so the Sink HOle repair guys would then come to the homeowner and offer him $50-60K to take title ...this together with teh insurance settlement would make the homeowner good for teh entire value of the house and he could move on.
So the sinkhole company (or one of its execs) now owns the house. He may make "cosmetic" fixes to the house say for $50K. He now has approx $100K invested and then he sells it for $200-220K. I also heard that the way the law is written, only the homeowner who originally owned the home when a sinkhole loss (claim) was amde is required to disclose it...otherwise it is considered repaired.
So that is how the fraud worked..insurance company was out $200K - original homeowner collects 100% of value from insurance company and sinkhole company and then moves on, sinkhole company sells house at big profit and avoids the disclosure rules.
By raising the deductibe to 10% of house value, the homeowner will be getting less in his claim from the insurance company and it makes the sinkhole guys come up with alot more money . Stilll not perfect but it has cut down on sink hole claims for fraudalent purposes.