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What is Sinkhole Insurance and What Does It Cover?

Insurance & Coverage

Florida experiences more sinkhole activity than any other state. Florida Statute 627.706 requires every insurer authorized to sell property insurance in Florida to also provide coverage for catastrophic ground cover collapse. However, sinkhole damage may not be covered by your homeowner's insurance policy because the law defines sinkhole damage differently from catastrophic ground cover collapse.

Florida law defines a sinkhole as "a landform 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 of limestone or dolostone or by subsidence as these strata are dissolved."

Florida law defines catastrophic ground cover collapse as "geological activity that results in all the following:

  1. The abrupt collapse of the ground cover;
  2. A depression in the ground cover clearly visible to the naked eye;
  3. Structural damage to the building, including the foundation; and
  4. 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.

Chapter 627 of the Florida Statutes also states: "Contents coverage applies if there is a loss resulting from a catastrophic ground cover collapse. Structural damage consisting merely of the settling or cracking of a foundation, structure, or building does not constitute a loss resulting from a catastrophic ground cover collapse."

If you do not have sinkhole insurance coverage and your home is damaged due to sinkhole activity, your claim MUST MEET ALL FOUR CRITERIA for catastrophic ground cover collapse otherwise your insurance company can legally refuse to pay your claim. All insurance companies licensed to do business in Florida are required to offer sinkhole coverage. This coverage often appears as an addendum or rider to your homeowner's insurance policy. You can also expect to pay higher premiums for this (added) coverage.

If your home sinks or has shifted due to ground cover collapse, or if you have confirmed sinkhole activity on your property, what follows are several steps you may want to take right away:

  • Take all steps necessary to ensure the safety of anyone who may come in contact with the area. Install fencing, rope or tape off the area around the sinkhole and property to warn people of the danger. If a person is injured on your property you could be held liable in a court of law.
  • Only if it is safe to do so, secure or remove your personal property.
  • Be prepared to evacuate your home.
  • Contact your insurance company or agent.
  • Contact local authorities such as city or county building department.
  • Consider contacting an attorney who handles sinkhole claims.
For Home Buyers

Make sure that the property (including structure) is insurable. Make sure sinkhole coverage is included in your homeowner's insurance policy. If it's excluded, consider purchasing a stand-alone sinkhole insurance policy.

Mortgage lenders often require a home inspection. When hiring a home inspector it is best to hire someone who is a State certified general contractor and who also has the proper industry credentials such as being certified and/or a member of National Association of Certified Home Inspectors (NACHI) and/or International Association of Certified Home Inspectors (InterNACHI). Be sure to request that your home inspection specifically addresses all issues associated with sinkhole activity.

If you are still concerned, you may want to consider hiring (at your own expense) a professional engineering firm to perform tests for sinkhole activity. This type of testing can be expensive and take several days to complete. Your insurance company cannot require you to pay for sinkhole testing prior to issuing a policy.