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Sinkholes and other so-called earth movements are rare, but they can devastate entire homes, leading to catastrophic, and expensive, loss. It’s important to know that sinkholes are not covered by standard homeowners insurance. Earthquakes, landslides, and mudflows are also not covered by any of the six basic protections included in a standard home insurance policy.
Sinkholes form when groundwater weakens the structure below the earth’s surface, causing the ground to collapse in on itself. They can also take shape when granular bits of the ground spill into cracked bedrock, causing the surface to dip or fall open completely.
Across the United States, the risk of encountering a sinkhole on your property is low, especially when compared to other natural hazards. But when they do show up, they’re powerful enough to pull entire homes into the ground in a matter of seconds. Depending on your insurer, you may be able to add sinkhole coverage to your policy for an additional premium or buy it separately as a stand-alone policy.
A standard home insurance policy won’t cover damage to your home from sinkholes or any other “earth movement”
To protect your home from sinkhole damage, you may be able to add sinkhole coverage as an endorsement to your existing policy or purchase it as a separate policy
Some states require insurers to offer optional sinkhole coverage
Due to the prevalence of sinkholes in Florida, coverage for “catastrophic ground cover collapse” is provided as part of standard homeowners insurance
Your dwelling coverage, which protects your home’s foundation and frame, insures your home up to its replacement cost, starting from its lowest structural layer up to its roof. But it won't cover the surface of the land beneath it since it’s not structurally built into the home.
The same goes for other structures on your property, as well as your personal belongings; homeowners insurance won’t cover your mailbox, fence, appliances, or any other structures and belongings you own if they’re damaged because of a sinkhole on or near your property. If you’re worried about sinkhole activity in your area, you may be able to add optional sinkhole coverage to your policy for an additional cost.
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Sinkholes are difficult to detect and form slowly over time before they suddenly appear. If you’re concerned about the possibility of a sinkhole on your property, the best way to protect your home from the financial effects of sinkhole damage is to add sinkhole coverage to your policy. Similar to the endorsement for earthquakes, sinkhole coverage may be added to your policy for an additional cost if your insurer offers the option, or you can purchase it as a separate policy altogether.
Some states, including Florida and Tennessee, require home insurance companies to offer optional sinkhole coverage. Sinkhole coverage includes the cost to repair your home’s foundation and stabilize the land beneath it. In order to use your sinkhole coverage, you must be able to prove that your home has already sustained structural damage from sinkhole activity or is in danger of collapsing into a sinkhole on your property.
Some sinkholes take time to depress the ground, while the most dangerous of them collapse within seconds. Therefore, the sooner you file a claim for sinkhole activity on your property, the sooner you can prevent further, catastrophic damage to your home and property.
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The chances of a catastrophic sinkhole damaging your home is relatively low compared to other natural hazards. Researchers say there’s a 1% chance of one happening every year, but the following states tend to report the most damage from sinkhole activity, according to the U.S. Geological Survey:
Due to the frequency of sinkhole-related claims in Florida, property insurance companies are required to provide coverage for “catastrophic ground cover collapse” as a standard protection, according to the Insurance Information Institute. This isn’t the same as sinkhole coverage, since it’s designed to cover only the most damaging or catastrophic sinkhole events.
A standard home insurance policy in Florida includes coverage for “catastrophic ground cover collapse” (CGCC). According to the Florida Department of Financial Services, CGCC protects homes from earth movements that result in:
The abrupt collapse of the ground cover
A depression in the ground cover clearly visible to the naked eye
Structural damage to the building, including the foundation
The insured structure being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure
Basically, coverage for catastrophic ground cover collapse means you’re covered if a sinkhole opens up on your property, but only if it meets those four stipulations. Sinkholes that result in only minor damage wouldn’t be covered. Since its legislation in 2007, Florida is currently the only state that offers CGCC as part of a standard policy.
Home insurers in Florida are also required to offer sinkhole coverage as an endorsement to a standard policy, but they have permission by the state to inspect your home and deny you that coverage if you live within a certain distance of a sinkhole.
According to the Insurance Journal, home insurance companies in the Sunshine State paid a total of $1.4 billion in sinkhole damage between 2006 and 2010, and that number has more than tripled since. Most of those claims were filed by homeowners in Pasco, Hernando, and Hillsborough counties, and while only a small percentage of them were actually catastrophic, the majority of them reported cracks in the home’s foundation caused by the home’s sudden settlement which can lead to bigger issues down the line.
There are eight different types of homeowners insurance policies for various home types and coverage needs.
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