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Homes damaged by Fraser sinkhole not likely covered by insurance

Dec 30, 2016

Households affected by a sinkhole in suburban Detroit may get some bad news from their insurance companies.

Barry Feldman is a Southfield attorney specializing in insurance litigation. He says damage from the Fraser sinkhole might not be covered by homeowners' insurance.

"As a general rule," Feldman said, "these homeowners' policies have exclusions for damaged caused, and this is the key phrase, 'directly or indirectly,' by water, mud, earth movement and so forth."

Feldman says he expects most claims would be denied, but people should file anyway. If the claim is denied, he said there are still other steps to take. But they can be expensive, and time consuming.

According to Feldman, a concurrent causation provision could prevent policyholders with damaged homes from receiving a settlement.

The concurrent causation provision stipulates that when damage is covered by one provision, but excluded from another, the exclusion controls, Feldman said.

Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, says sinkhole coverage is offered as a voluntary additional rider, but is not part of a boilerplate homeowners insurance policy.

Even if a policyholder purchases sinkhole coverage, there are multiple factors in determining what constitutes a sinkhole, and the degree of coverage.

"You would really need to have a total loss to even pull coverage," Kuhnmuench said.  

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