Sinkhole insurance is a home insurance endorsement (i.e., an addition to your policy) that can help pay for structural damage sinkholes cause. This coverage applies to your home and your personal property.
Simply put (because this can get complicated fast), a sinkhole is a depression in the surface of the ground caused by the sudden collapse of the land’s surface layer. Insurers often describe sinkholes as “subterranean void” or a “landform created by subsidence (or caving in) of soil, sediment, or rock.”
Either way, when a sinkhole occurs near a home, its effects can be devastating.
That’s why sinkhole insurance is so important in regions that experience sinkhole activity, like Florida. If the ground collapses and cracks your home’s foundation, it can cost tens of thousands of dollars to repair the damage.
Sinkhole insurance offers a way forward after the unexpected strikes. It may help pay for necessary, expensive repairs, such as:
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Stabilizing the land and the home.
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Repairing the foundation.
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Fixing structural damage to your home and other structures on your property.
Coverage details vary by state and insurance company. For instance, other structures aren’t covered by sinkhole insurance in Florida, but state law does require insurers to cover land stabilization and foundation repair.
How sinkhole coverage works
If you have sinkhole insurance coverage, it applies when your home sustains structural damage. Some common signs your property has structural damage include:
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Floor displacement.
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Buckling walls.
A geotechnical engineer or a professional geologist who can identify sinkhole activity according to state testing standards must confirm the loss was caused by a sinkhole.
When you draw on this coverage, your AOP deductible typically applies. Florida home insurance policies, however, may have a sinkhole deductible. This is usually a percentage deductible based on your dwelling insurance limit.
What sinkhole insurance coverage doesn’t include
Certain damages aren’t covered by sinkhole insurance, such as:
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Damages resulting from mine subsidence
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Foundation cracks caused by something other than a sinkhole, like shrinking and swelling clay.
Before issuing sinkhole insurance, some insurance companies require a professional engineer to visually inspect the home. The homeowner is often required to pay the inspection fee.
Is sinkhole insurance coverage required?
You, the policyholder, are not legally obligated to add sinkhole insurance to your homeowners insurance policy. But one state, Florida, requires home insurers to offer catastrophic ground collapse coverage as part of their homeowners insurance, while another, California, requires insurers to make earthquake coverage an optional extra.
Sinkhole insurance vs. catastrophic ground coverage collapse
Catastrophic ground cover collapse (CGCC) is a required coverage in Florida, and what triggers it is different than what triggers sinkhole coverage. In order for catastrophic ground coverage collapse coverage to apply, all of the following conditions must be met:
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There's an abrupt collapse of ground cover.
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The depression in the ground cover is clearly visible.
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The home and its foundation must have sustained structural damage.
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A government entity condemned the structure and ordered it to be vacated.
By contrast, sinkhole insurance coverage does not require the government to condemn the structure (a very high threshold to meet) or a clearly visible depression in the ground cover in order to satisfy all the conditions for a sinkhole loss.
CGCC is only available in Florida.
Who needs sinkhole insurance?
Sinkhole insurance is an important coverage for homeowners who live in an area with a moderate or high amount of sinkhole activity. A good place to start is the US Geological Survey’s map of areas prone to sinkholes. This can be helpful in deciding whether further investigation is necessary. From there, a local engineer or town building inspector can tell you about the sinkhole risks homeowners face in a particular area.
Is sinkhole insurance worth it?
Sinkhole insurance is very worthwhile for homeowners who face the risk of damage from sinkholes. The value of damage sustained from sinkholes can add up quickly if you don’t have insurance to help cover the cost.
You should know, however, that it can be difficult to find coverage if your home has unrepaired or remediated sinkhole damage. If you have questions about your home’s sinkhole protection, talk to your insurance representative.
