While a homeowners policy typically covers many natural disasters like fire and hurricanes, there are some that are not covered. One of these exclusions is sinkholes, which are formed when the ground below the land surface gets saturated with groundwater and eventually collapses inwards. This can cause not only structural damage to a home, but also an abrupt collapse if the sinkhole becomes large enough.
Determining whether you have a sinkhole on your property can be difficult. If you live in a high-risk sinkhole state and believe your house could be at risk, sinkhole insurance could be an important insurance option.
What is sinkhole insurance?
Sinkhole insurance is a special insurance policy that covers your home and personal belongings from sinkhole damage. Sinkhole insurance also pays to stabilize your home’s land and covers the cost of repairing your foundation.
Many homeowners assume that their home insurance policy will cover sinkhole damage, but that is not always the case. Standard homeowners insurance policies usually do not include sinkhole coverage, although some open perils policies may include it.
Home insurance covers the physical structure of your house, but not the land it sits on. Other structures, like a detached garage, are also typically insured structures. Sinkholes are technically a form of earth movement, which is not a covered peril under most home insurance policies. Sinkholes are generally treated like earthquakes in terms of insurance coverage.
There are two main types of sinkhole insurance — sinkhole loss coverage and catastrophic ground cover collapse coverage. Here are the differences in coverage:
- Sinkhole loss coverage: Sinkhole loss coverage is an insurance endorsement that typically covers man-made sinkholes, including those related to mining operations. It may or may not cover naturally occurring sinkholes.
- Catastrophic ground cover collapse coverage: Catastrophic ground collapse coverage protects your home if it falls into a sinkhole, and the foundation is damaged beyond repair. To qualify for catastrophic ground collapse coverage, your home must be condemned by a local government agency.
How does sinkhole insurance work?
When you apply for coverage, the insurance company may inspect your property for any structural damage before issuing your sinkhole insurance policy. The land on your property may also be geologically tested to detect potential sinkholes.
In the event of a sinkhole, a claims adjuster may visit your home with other experts, like a geologist or engineer, to survey and investigate the damage before making any determinations on the cause of the claim and cost of repair.
Who needs sinkhole insurance?
Sinkholes are most common in areas where the rocks beneath the ground surface are soft and porous, like limestone and gypsum, which can be dissolved by groundwater and create caverns beneath the land surface. According to the U.S. Geological Survey, about 25% of U.S. land is susceptible to sinkholes. The following states are particularly at risk for sinkholes:
However, sinkhole insurance is not as accessible as regular home insurance. Not every insurance company offers it. Out of the list above, Florida and Tennessee are the only states that require insurance providers to offer an optional sinkhole insurance policy. If you live in one of these states, you can purchase sinkhole insurance as a home insurance endorsement or as an individual policy.
Keep in mind that some sinkhole insurance policies do not cover man-made sinkholes, which are common in places like Pennsylvania. Homeowners who struggle to get sinkhole insurance can contact their state’s department of insurance to find out what coverages and policies are available to them.
Is sinkhole insurance worth it?
If you own a home in a high-risk sinkhole area, sinkhole insurance could be something to consider. Without sinkhole insurance, you would have to pay out-of-pocket to repair or rebuild your home. Remember that most homeowners insurance companies do not cover sinkhole claims.
Although researchers believe a catastrophic sinkhole has a one in 100 chance of occuring in any year, you may still be affected by smaller sinkholes in your area. To decide if your home needs this type of insurance, some factors to think about are your location, the history of sinkholes in the areas surrounding you, as well as any irregular weather patterns like heavy rain or flooding, or man-made events near you that could accelerate the creation of a sinkhole.
If you decide to purchase sinkhole insurance, you will likely have to pay a sinkhole deductible. The deductible is usually a percentage of the policy’s dwelling limit. For instance, in Florida, homeowners can choose a 1%, 2%, 5% or 10% deductible for their sinkhole insurance.
Frequently asked questions
Does homeowners insurance cover sinkholes?
In most cases, homeowners insurance does not cover sinkholes. Your homeowners insurance policy only covers the physical structure of your house. Like earthquakes, sinkholes are a form of earth movement, which is usually not a covered peril. You need to have sinkhole insurance in order to get reimbursed after a covered loss.
How much does sinkhole insurance cost?
Sinkhole insurance is typically very expensive, and it is a separate cost on top of your regular home insurance premium. Additionally, you have to pay an out-of-pocket deductible each time you file a sinkhole claim. Because of that, many homeowners forgo sinkhole insurance to save money.
Which insurance companies offer sinkhole insurance?
Unlike home or auto insurance, sinkhole insurance is not a popular policy. In low-risk sinkhole states, you might not be able to find coverage anywhere. Florida and Tennessee are the only states that require all insurance companies to offer sinkhole coverage. If you are looking for sinkhole insurance, your best option is to find a local insurance company in your area that offers it.
What are the warning signs of a sinkhole?
While sinkholes often seem to appear without warning, their development happens slowly over time. When inside your home, look for changes in the structure. This could be doors and windows that don’t close properly, cracks in the walls and floors and cabinets that become uneven or slanted. Outside of your home, check for sagging in fences, foundations and trees, as well as ponds of water where rainfall hasn’t pooled together before or uneven depressions in the yard and street. If anything seems particularly alarming, you can reach out to a contractor specializing in foundation repair for a second opinion.