Sinkhole Insurance

The U.S. Geological Survey estimates that 35-40% of the country's land is susceptible to sinkholes. While giant sinkholes often make news, smaller sinkholes are also exceptionally costly to homeowners. Sinkholes have the potential to destroy homes and property, but because they are relatively rare, most people never consider how real that threat could be for their families. Though these natural disasters are unpredictable, you can protect your property in advance with a sinkhole insurance policy.

A local independent insurance agent can help you get equipped with all the sinkhole insurance you need. They'll help you find a policy that includes the appropriate limits for your property. First, though, here's a breakdown of sinkhole insurance, what it covers, and when you need it.

What Is Sinkhole Insurance?

Many homeowners insurance and business insurance policies offer special endorsements for sinkhole coverage. Without this additional coverage, sinkhole damage is frequently not covered in standard policies. If your home or business is destroyed by a sinkhole and you don't have a sinkhole insurance policy, you will likely not receive compensation for your losses. This is a financial hit that most families and small businesses cannot manage.

Cars need coverage, too. You can get protection for your vehicle by adding comprehensive coverage to your car insurance policy. This coverage can reimburse you for losses stemming from damage caused by sinkholes and other perils like fire, vandalism, collisions with large animals, and theft. Your independent insurance agent can help you add sinkhole coverage to your home insurance, business insurance, or auto insurance.

What Does Sinkhole Insurance Cover?

Sinkhole coverage is available as an endorsement to homeowners insurance in certain areas. This coverage can reimburse you for sinkhole damage or destruction to your home's structure, your personal property or contents, and additional structures on your property. Sinkhole coverage is often included in an earth movement endorsement to home insurance, which also covers earthquakes, landslides, mudflows, erosion, and subsidence of the earth. Typically there are two forms of sinkhole coverage:

• Sinkhole loss coverage: This endorsement covers sinkholes caused by man, such as those formed by mining operations.
• Catastrophic ground cover collapse coverage: This endorsement covers your home's foundation if it falls into a sinkhole and is damaged beyond the point of repair. This coverage is only available and required in Florida.

Your home must be condemned by a government agency to qualify for catastrophic ground collapse coverage. An independent insurance agent can help you add all the sinkhole protection you need to your home insurance policy relative to your location.

States at Risk of Sinkholes

Sinkholes are catastrophic phenomena that occur worldwide. They are natural depressions or holes that form in the earth’s crust. Sinkholes can result from natural causes (e.g., erosion, flooding, and droughts) and man-made causes (e.g., excessive drilling, mining, fracking, and heavy traffic). They can be dramatic events that swallow cars, roadways, and even homes. They can also cause minor depressions in the earth’s surface, barely visible but highly destructive. 

Some sinkholes happen gradually over time, while others are sudden and disastrous. A ground shift of as little as a couple of inches can be enough to severely damage the structure of a home or building, rendering it unsafe for habitation. However, some states are more vulnerable than others to experiencing sinkholes and their destruction. These areas are:

In Florida and Tennessee, insurance companies are required to offer sinkhole coverage. In all other states, it's up to each individual insurer to decide if they want to offer this optional protection. 

If you live in any of these listed states, it's wise to check your insurance coverage to ensure you have protection against sinkhole damage and destruction.  An independent insurance agent can help you review your existing policy and add or increase this coverage if necessary.

How to Detect a Sinkhole on Your Property

Many sinkholes develop over time. If you maintain your property and keep an eye out for changes in the ground, you'll have the best chance of avoiding sinkhole damage. Those who live in sinkhole-prone areas should be consistently aware of any signs of shifting earth. Things to look for include:

If you suspect sinkhole activity, contact your insurance company. They will send someone to investigate and advise you on how to secure your property.

How Much Does Sinkhole Insurance Cost?

Your sinkhole coverage is likely to have a separate deductible from your home insurance's all other perils coverage section. Your sinkhole coverage's deductible might be between 1% and 10% of your home insurance's dwelling coverage section limit. So, if you had a home insurance policy with a dwelling coverage limit of $400,000, your sinkhole coverage deductible could range from $4,000 to $40,000, which you'd have to pay out of pocket before being reimbursed for a claim.

The cost of sinkhole insurance can vary based on many different factors. These can include your location and your area's risk of sinkholes. A local independent insurance agent can help you find affordable sinkhole insurance near you.

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Here's How an Independent Insurance Agent Can Help

When it's time to protect your home against sinkhole damage and destruction, no one's better equipped to help than a local independent insurance agent. These agents have access to multiple insurance companies, so they're free to shop and compare policies and rates for you. They'll present you with several of the best quotes. And down the road, your agent will still be there to help you file claims or update your coverage as necessary.