Sinkholes are devastating, and without coverage, homeowners will have to pay out of pocket for expensive repairs. Homeowners insurance covers repairs, but not in the case of sinkholes.
On average, repairs to your home’s foundation can cost over $10,000. Since sinkholes are rare and hard to predict, homeowners often overlook or forget about sinkhole coverage. Unless you live in Tennessee or Florida, sinkhole insurance coverage is not included with homeowners insurance policies. This insurance comes at an extra cost to homeowners because sinkholes are considered an “earth movement” and not a peril like a hurricane.
If your home is in an area with a high risk of sinkholes, you absolutely should take the precaution of getting sinkhole coverage for your home in addition to home insurance.
How Sinkhole Insurance Coverage Works
Home insurance does not always require an inspection before an insurance company gives you coverage. Contrarily, before agreeing to provide homeowners coverage for sinkhole insurance, insurance companies will hire someone to inspect your house. They are checking to see how at-risk your home is for sinkhole damage.
To decide if they will grant you insurance, sinkhole insurance companies look for signs of the following on your property:
- Damage to your home’s foundation and structure
- Indications of a sinkhole itself on your property
- How porous and soft the ground is around your property
Based on the insurance companies’ findings at your property, they will decide whether or not to insure you for a sinkhole.
Is Sinkhole Loss Coverage or Catastrophic Ground Collapse Coverage the Best?
Long answer short, neither insurance option is the “best” per se for your home. Each insurance policy provides coverage for your house and finances in situations home insurance doesn’t. Here are the differences between the two types of insurance protecting your property:
- Sinkhole Loss Coverage is an insurance policy endorsement added to home insurance that provides coverage for the cost to repair damage to the structure of your home. Damage includes foundation cracks, unlevel floors, buckling walls, and more.
- Catastrophic Ground Collapse Coverage is an insurance policy with four criteria to determine if the damage to your home qualifies for financial compensation:
- The abrupt collapse of ground cover
- Depression in the ground clearly visible to the naked eye
- Structural damage to the building, including its foundation
- The structure is condemned and ordered to be vacated by a government agency authorized by law to issue such an order for that structure.
In summary, sinkhole loss coverage insurance is more comprehensive for your home than ground collapse coverage insurance. Sinkhole loss insurance will pay for your car, garage, foundation damage, and property loss, as well as steps to prevent damage to your home.
On the other hand, catastrophic ground collapse insurance only offers compensation if the damage caused meets the four requirements. Catastrophic ground cover collapse insurance requires a government agency to intervene, while sinkhole loss insurance does not.
What Doesn’t Insurance Cover?
Insurance coverage for damage caused by a sinkhole does not include the following:
- Parking lots
How Much Does Insurance Cost?
Both insurance policies are expensive compared to home insurance coverage, especially in Florida. Annually, sinkhole insurance rates can cost $2,000 to $4,000 on average. A catastrophic ground insurance policy is the more expensive insurance because it is used in the most catastrophic situations.
That’s another reason insurance companies make sure the damage to your home meets the four requirements when you make insurance claims. With that in mind, the insurance policy will pay out over $100,000 to repair sinkhole damage or replace your home.
As homeowners compare different insurance quotes, remember that the peace of mind you get from having insurance is better than financial devastation any day.
Is Sinkhole Coverage Worth It?
In short, if you live in Florida, Tennessee, Pennsylvania, Kentucky, Alabama, or Missouri, yes. Get insurance for your home! In some instances, you don’t get to decide whether you get insurance or not. If you get a mortgage for your home, the loan provider will want you to protect your investment with sinkhole insurance.
They may require you to get insurance if you live in Tennessee or Florida. In Florida and Tennessee, state law requires homeowners to have sinkhole insurance, plus it comes with home insurance or is available as an add-on insurance option.
Homeowners, do your due diligence when you get insurance. Hire a property appraiser, engineer, or professional land surveyor to help decide if you need sinkhole insurance for your home. Inquire about resources, such as county and state sinkhole databases, to learn about the area’s history.
Knowing the area’s history will give you an idea of the likelihood of a sinkhole happening in the vicinity of your home. Remember, homeowners insurance alone does not cover damage or loss caused by a sinkhole.
What causes sinkholes?
According to the Florida Department of Environmental Protection, the state is on thousands of feet of limestone, sand, and clay. Limestone is a kind of “karst terrain”, making Florida prone to sinkholes. “Karst terrain” – usually limestone, gypsum, or dolomite – is slowly dissolved as water moves between the cracks and pores in the bedrock.
As the rock dissolves, the pores become huge cavities that eventually cause the land surface to collapse because there isn’t enough support. There are three kinds of sinkholes:
- Dissolution sinkholes: Water moves through cracks, dissolves the rock, and gradually forms a depression or sunken area in the ground.
- Cover-subsidence sinkholes: When sand slowly permeates and dissolves the bedrock, causing a depression on the ground cover over time.
- Cover-collapse sinkholes: These sinkholes occur when clay makes up a significant amount of the bedrock. Like cover-subsidence sinkholes, sediments spall into a crevice. Because clay is adhesive, a bridge is formed above the cavity and beneath the ground cover. When the bridge becomes too weak to hold the ground above it, the surface suddenly collapses, causing a catastrophe. Unlike dissolution and cover-subsidence sinkholes, cover-collapse sinkholes happen abruptly without warning.
Sinkholes can be human-made or occur naturally. Construction, drilling, and mining are several examples of human-made sinkholes. An example of a force of nature that can cause a sinkhole is a drought followed by significant rainfall.
It’s essential to be aware of the causes of sinkholes because insurance companies may provide a policy that excludes natural or human-made sinkholes. In other words, some insurance companies might cover the cost of damages resulting from mining, but not nature.
Other insurance companies might compensate homeowners for damages caused by nature but not by humans. While homeowners search for insurance, be sure to understand the details of your sinkhole insurance.
How do I know if my house is at risk?
There may be a sinkhole if you notice any of the following happen at your home:
- Cracks in your walls
- Door and window frame cracks
- Doors, windows, and cabinets don’t open or close properly
- Uneven flooring
- Leaning fence posts
- Deep cracks in the sidewalk, street, or driveway
- Sunken areas in the yard or around your home
Does insurance cover my garage?
Sometimes insurance covers your garage. Check with your insurance provider to be sure.
Does home insurance cover sinkholes?
Homeowners insurance does not cover a sinkhole unless you live in Tennessee or Florida.
What do I do if I suspect a sinkhole on my property?
- If physical injury or property damage is imminent, professionals recommend you leave home and call 911.
- If immediate danger isn’t an issue, call your insurance provider.
- If the structure is not covered by insurance, the best thing for a homeowner is to call their local government agency for assistance.
- Contact utility companies if your gas, water, and electricity are affected.
- Get in touch with the state geological survey.
- Consult a professional land surveyor.
How do I get coverage?
Unless you live in a high-risk area like Florida, Tennessee, Pennsylvania, Kentucky, Alabama, and Missouri, you will unlikely get coverage for a sinkhole from insurance companies. If homeowners live in a high-risk state, insurance is available via national insurance agencies and local insurance agencies. Check with your existing home insurance provider to see if you can get coverage. Keep in mind that insurance agencies tend to specialize in sinkhole loss coverage or catastrophic ground coverage. An insurance agency rarely offers both coverage insurance options for your home.
Will insurance protect my car?
If a sinkhole swallows your vehicle, your car insurance will cover it only if you have comprehensive coverage on your car insurance policy. If you do not have comprehensive car insurance, call your agent today! It’s best to see whether human-made or natural sinkholes are in your insurance policy. Sometimes, sinkhole insurance will cover it but double-check with your insurance agent.