Hegel v. The First Liberty Insurance Corp.

Facts

The Hegels had a homeowner’s insurance policy with First Liberty for their home in Spring Hills, Florida effective October 5, 2010. The policy insured against “Sinkhole Loss.” Under the policy, “Sinkhole Loss” meant “…structural damage to the building, including the foundation, caused by sinkhole activity.” However, the policy did not define the term “structural damage.”

On March 1, 2011, the Hegels discovered damage to their home and submitted a claim to First Liberty. In September 2011, First Liberty hired a Structural Engineering and Inspections, Inc. to investigate the claim. SEI concluded the damage to the home did not meet the criteria for “structural damage” under Florida Statutes §627.706. First Liberty denied the Hegels’ claim. In November 2011, the Hegels requested a neutral evaluation by a public adjustor, Kevin Scott. Scott issued a report in July 2012 noting that the policy’s effective date was prior to the implementation of Florida Statutes §627.706 and the statute’s criteria would not apply to the policy. His report did not apply any particular definition of structural damage, but found “sinkhole activity” and that “there was physical damage that resulted from settlement.” The Hegels then hired Central Florida Testing Laboratories, Inc. for additional testing. In March 2013, CFTL issued a report determining sinkhole activity was contributing to “widespread, minor cracking to the… home.” The Hegels then obtained bids from Champion Foundation Repair ($141,180) for remediation work and Triad Consulting Group ($20,743.17) for cosmetic repairs.