Sinkholes don’t naturally occur very often, but when they do, they can swallow entire houses with little or no warning.
If your property is at risk for serious sinkhole activity, getting a sinkhole insurance policy can be a wise precaution.
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What is a sinkhole?
A sinkhole is an area without sufficient external drainage for water. Rainwater and runoff get trapped inside the sinkhole and drain away through the subsurface. This water movement gradually carries away the rock and earth supporting that patch of ground. When the weight of the surface material is greater than the strength of the earth supporting it, the sinkhole collapses. And if your house happens to be on top of that sinkhole, the damage can be catastrophic.
Sinkholes are most common in Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas, but they can occur in any state. At least 20 percent of the United States is at risk for sinkhole activity.
Unfortunately, there’s no good way to predict where and when a sinkhole will occur. The U.S. Geological Survey suggests watching for small holes forming in the ground on your property and checking your foundation regularly for cracks. If you do see signs of sinkhole activity, you’ll definitely want to consider getting sinkhole coverage added to your homeowners insurance policy or buying a separate policy to provide insurance coverage for such damage.
Types of sinkhole insurance
There are two basic types of sinkhole coverage. Neither is truly comprehensive since sinkhole coverage is generally limited to very specific circumstances. However, having some coverage may be better than having none at all if you think your home may be at risk.
- Sinkhole loss coverage is an endorsement tacked onto your existing homeowners insurance policy. This coverage is generally limited to sinkholes caused by previous mining operations, though some insurance companies may extend it to include natural sinkholes. Before you can get sinkhole loss coverage, you’ll probably be required to get a geological survey of your property. Ironically, if the survey indicates a high risk of sinkholes, the insurance company will likely refuse to issue this coverage to you.
- Catastrophic ground cover collapse coverage protects your home if a sinkhole occurs that meets these four requirements:
- An abrupt collapse of the ground cover occurs;
- The depression in the ground is clearly visible to the naked eye;
- The insured structure suffers structural damage (including damage to the foundation); and
- The insured structure is condemned by the appropriate government agency.
In other words, the damage to your house has to be so severe that the building is basically destroyed. If a sinkhole causes a less dramatic level of damage, such as a cracked foundation, then catastrophic ground collapse insurance won’t help. Florida and Tennessee both require homeowners insurance companies to include this type of coverage; homeowners in other states may find it challenging to get catastrophic ground collapse coverage.
How to get sinkhole insurance coverage
Sinkholes are a fairly rare type of disaster. There’s roughly a one in 100 chance of a catastrophic sinkhole forming on the average property in any given year. However, if you live in an area prone to sinkhole activity, getting coverage can be a wise precaution.
Many homeowners insurance policies provide some level of coverage for damage caused by “ground movement,” which can include sinkholes. Check with your insurance agent or your insurance provider’s customer service department to verify how much of this coverage you have and how far it extends to sinkhole claims.
Homeowners insurance policies issued in earthquake-prone areas, including most of California, will usually not cover ground movement events unless you buy a separate earthquake policy…and earthquake insurance probably won’t cover sinkholes at all.
If you don’t have sufficient sinkhole coverage built into your homeowners insurance policy, you can get an endorsement or a separate policy that will cover sinkhole damage. Homeowners living in sinkhole-prone states will probably find multiple insurance companies offering this type of coverage, although sinkhole insurance in such areas can be very expensive.
Before you sign on the dotted line, review your sinkhole coverage to make sure you’re getting the protection you want. For example, if you get sinkhole loss coverage, you’ll probably want to insist on an endorsement that protects you from naturally forming sinkholes as well as sinkholes caused by mining.
Given how much sinkhole insurance can cost in high-risk areas, you’ll definitely want to shop around and compare rates before choosing an insurance company.