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Does Your Homeowners Insurance Cover Sinkholes?

The tragic news of the sinkhole that recently killed 37-year-old Jeff Bush has many Florida residents wondering, “If my home were damaged by a sinkhole, would my homeowners policy cover it?”

And, “How likely is it that my home would be damaged by a sinkhole?”

Unfortunately the risk may be greater than you think. According to the U.S. Geological Survey, about 35 to 40 percent of the entire United States is susceptible to dangerous sinkholes; and Florida is one of the most vulnerable states.

Before we answer your question, “Is my home covered against sinkholes,” we must first review the legal definition of “sinkhole” and compare it to a “catastrophic ground cover collapse.” They are not the same and it’s possible to have one without the other.  

Sinkhole Coverage vs. Catastrophic Ground Cover Collapse Coverage

According to Florida law, a sinkhole is “a land form created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater. A sinkhole may form by collapse into subterranean voids created by dissolution (the dissolving) of limestone or dolostone or by the subsidence as these strata are dissolved.”

If your home were damaged by a sinkhole and you carry the sinkhole endorsement on your homeowners policy then this would be considered a covered loss.

The other related coverage, which is included on most Florida homeowners policies, is known as “catastrophic ground cover collapse coverage.” For a catastrophic ground cover collapse to be covered, the insured must demonstrate that:

  1. There is a visible depression;
  2. There is structural damage to the home or other insured structure; and
  3. The home or other insured structure must be condemned.

If the insured’s home does not meet all three requirements (and they do not carry sinkhole coverage) then the loss would not be covered.

Why Is Sinkhole Coverage An Endorsement In Florida?

In 2009, the Florida legislature passed a law that allowed residents to opt-out of sinkhole coverage. The reason for the law was to help insureds lower their annual homeowners insurance premiums. Since Florida has more sinkholes than any other state in the country, premiums were naturally higher and many homeowners felt they could not afford to pay the extra premium that was incurred as a result of the increased risk for sinkholes.

Further complicating the issue, since homeowners insurance premiums are often factored into mortgage payments through the escrow, skyrocketing insurance rates were jeopardizing a homeowner’s ability to meet his mortgage payments.  To help people manage their mortgage and homeowners insurance payments, lawmakers allowed sinkhole coverage to be separated from standard homeowners policies (but catastrophic ground collapse coverage was still standard on Florida homeowners policies).

The unfortunate side effect of this law passing has been that Florida now has many homeowners who effectively cover nothing in the event of sinkhole damage.

Should I Carry Sinkhole Coverage?

The best thing to do is to call your insurance agent and review your policy with him or her. Ask your agent if your home would be covered if it were damaged by a sinkhole. If you don’t currently have sinkhole coverage get a quote for it. If the rate is too high consider getting a quote with a higher deductible to offset the cost.

The main thing to remember is that Florida has more sinkholes than any other state in the nation. And unless you have sinkhole coverage, you are at risk. Ask yourself, “Could I afford to pay for damages to my home if I were to suffer a loss from a sinkhole?”

If not then it’s time to call your agent and secure coverage so you can have the peace of mind knowing your home is insured.