There are altogether too many unfortunate scenarios which might cause damage to your home and property, and your home insurance policy might not cover you for all of them. For example, you’ll have to add special endorsements to your policy if you want protection against flood or earthquake damage. Another risk potentially not covered by standard homeowners policies? Sinkholes. You see them in the news for swallowing homes whole – but could it ever happen to you? We’ll explore how to protect yourself from sinkholes and what’s included in sinkhole insurance coverage but first let’s discuss some basic information about this type of risk.
What are sinkholes?
Sinkholes occur when rock below the surface of the ground erodes, normally caused by an accumulation of water which dissolves porous rock such as limestone. This leaves a void in the ground not usually visible until the top level of soil collapses. The resulting deformation of the ground is called a sinkhole.
Sometimes a drought followed by heavy rainfall, drilling or mining activity, and even improper draining of rainwater that comes off of a home can also cause sinkholes. Sinkholes generally take a long time to develop, are extremely difficult to detect, and can occur almost anywhere. In fact, the U.S. Geological Survey (USGS), estimates between 35-40% of land in the U.S. is vulnerable to sinkholes.
Where do they typically occur?
While sinkholes can happen anywhere evaporite or carbonate underground rock are, the states which experience the most damage from sinkholes are Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas.
Are there warning signs for sinkholes?
Although the USGS says there is not currently an efficient or foolproof way of detecting sinkholes, there are potential signs that a sinkhole may be forming under your property. Signs include:
- Fresh or recent cracking of a home’s foundation, driveway, or sidewalks
- Fresh or recent cracking of doorways, windows, and interior/exterior walls
- Hard-to-close doorways and windows
- Leaning trees, pooling groundwater, or recent depression of the ground outside of your home
Sinkholes can still occur even if these warning signs are not present, but a noticeable change to the landscape or foundation of your home should prompt a call to your insurance provider as quickly as possible.
Does homeowners insurance cover sinkholes?
Only Florida and Tennessee currently require homeowners insurance companies to offer coverage for what they call “Catastrophic Ground Collapse,” which may not actually cover damage caused by a sinkhole.
Is Catastrophic Ground Collapse coverage the same as sinkhole insurance? The short answer: No. Even though they would seemingly mean the same thing, Catastrophic Ground Collapse coverage differs from sinkhole insurance by requiring four standards are met before an insurance company will cover your loss:
- The ground collapse must be abrupt
- The depression of the ground cover must be clearly visible to the naked eye
- Structural damage must occur to the building covered on your insurance policy (this includes the foundation)
- The structure must be condemned and ordered to be vacated by the government agency authorized to issue such an order for that structure
If you sustain a sinkhole on your property but don’t meet those criteria, you could be faced with a financial catastrophe. Your home could be damaged, but not severely enough to warrant a “condemned” status, leaving you with a huge repair bill and no coverage.
What is sinkhole insurance?
Sinkhole insurance, on the other hand, does not require these same standards to be met before coverage applies for a loss, making it easier for homeowners to file a claim if their home is damaged. Although Catastrophic Ground Collapse coverage is automatically included in Florida and Tennessee homeowners insurance policies, customers can opt for broader coverage by adding a sinkhole coverage endorsement.
The same is true for customers outside of those two states (where Catastrophic Ground Collapse coverage is not automatically included) who want to protect their homes against sinkhole damage. This type of endorsement expands the Dwelling and Personal Property coverage on existing home insurance policies to include losses due to sinkholes. Unfortunately, sinkhole insurance can be quite a bit more expensive than a Catastrophic Ground Collapse endorsement depending on the location of your home and the risk associated with your area, so it is important to weigh your options and read the details of the policy carefully.
How do you know if you need sinkhole insurance?
For most home buyers, especially those taking out a mortgage, you’ll have the property inspected before you buy it. It’s a good idea to ask the inspector or inspection company if the home is located in a sinkhole-prone area and to address any problems that are potentially related to sinkholes, especially any existing damage to the foundation.
Even if you are not in an area prone to sinkholes, you should at least consider discussing them with your insurance provider. Early detection is key to preventing a major loss, but regular monitoring of changes in the area surrounding your home can also help lessen the chances that your home suffers significant damage.
It’s important to remember as a homeowner that you have many options when it comes to homeowners insurance, and the best way to find the right policy is to shop around with as many companies as possible. Ask lots of questions to make sure you are clear on how the policy handles various types of losses to avoid a major headache down the road. And if you have questions your insurance company can’t answer, ask me.