Florida Condos: Sinkhole Insurance Essential?

Florida is known for its sunny weather, beautiful landscapes, and iconic attractions, but it also has its fair share of risks, including sinkholes. Sinkholes are a common occurrence in the state due to its karst terrain and limestone-rich underground, which can be easily eroded by groundwater. This has led to many Florida homeowners wondering if their insurance policies cover sinkhole damage. While standard homeowners insurance policies typically exclude coverage for sinkholes, Florida has some unique regulations and options for sinkhole insurance. So, do Florida condos carry sinkhole insurance?

Florida Statute 627 requires all insurance companies in the state to offer sinkhole insurance

In Florida, sinkholes are a common occurrence, and they pose a significant threat to homes and properties. While standard homeowners insurance policies typically exclude coverage for damage caused by sinkholes, Florida has implemented specific statutes to ensure that residents have access to sinkhole insurance.

Florida Statute 627 mandates that all insurance companies operating in the state must offer sinkhole insurance to their customers. This means that insurance providers are required by law to make sinkhole coverage available as an option for Floridians. The statute ensures that residents have the opportunity to protect themselves financially from the potential devastation of sinkholes.

However, it is important to note that insurance companies' willingness to provide sinkhole coverage may depend on certain factors. According to the Florida Department of Financial Services, "all insurance companies licensed in Florida must 'offer' sinkhole coverage. However, an insurance company's willingness to actually provide sinkhole coverage is contingent upon the characteristics of the ground structure beneath your home." This means that while insurance companies must offer sinkhole insurance, they may evaluate the risk associated with the property before providing coverage.

Florida Statute 627 ensures that residents have the option to purchase sinkhole insurance, but it does not guarantee that every homeowner will be able to obtain coverage. When applying for sinkhole insurance, insurance companies may send professionals to inspect the property, assess the land, and determine the likelihood of a sinkhole occurring. This evaluation helps insurance companies decide whether to offer sinkhole coverage for that specific property.

Additionally, it is worth mentioning that Florida's state-run, not-for-profit property insurance provider, Citizens Property Insurance, offers sinkhole coverage for certain policyholders. They also include a more comprehensive form of sinkhole insurance, known as catastrophic ground cover collapse insurance, in most of their home insurance policies. This type of coverage applies when geological activity results in specific conditions, such as abrupt collapse, visible depression, structural damage, and condemnation of the structure by government authorities.

Sinkhole insurance typically costs between $2,000 and $4,000 each year

While it may be challenging to find insurance coverage for sinkholes, it is not impossible. Many insurance companies offer sinkhole coverage as an add-on to an existing policy, and some companies offer sinkhole insurance as a stand-alone policy. In Florida, insurance companies are mandated by law to offer sinkhole coverage. However, this is only on an optional basis.

The cost of sinkhole insurance in Florida typically ranges from $2,000 to $4,000 per year, with some policies even exceeding this range. This cost can be a significant financial burden for homeowners, especially when considering the average cost of a homeowners insurance policy in the state. However, given that the average sinkhole insurance claim in Florida exceeds $100,000, the peace of mind that comes with this coverage may be worth the added expense.

It is important to note that sinkhole insurance does not cover all types of sinkholes. Some policies may exclude man-made sinkholes, and there are specific criteria that must be met for coverage to apply. For example, in Florida, the state's homeowners insurance policies include coverage for catastrophic ground cover collapse (CGCC). However, CGCC coverage has strict requirements, such as the damage resulting in the abrupt collapse of ground cover, a visible depression in the ground, and structural damage to the building, among others.

When considering sinkhole insurance, it is advisable to compare quotes from multiple providers to ensure you find the best rates and coverage options that meet your specific needs and budget.

Sinkhole insurance is commonly known as sinkhole loss coverage

Sinkhole insurance, commonly known as sinkhole loss coverage, is an optional endorsement that can be added to a standard insurance policy. It is designed to protect homeowners from structural damage to their homes caused by sinkholes. While sinkholes can be catastrophic to real estate and personal property, they are one of the more challenging events for homeowners to obtain insurance coverage for. This is because sinkholes are difficult to predict and expensive to insure. Furthermore, once land has collapsed due to a sinkhole, insurers may discontinue underwriting coverage for that area.

In some instances, sinkholes may also be covered by catastrophic ground collapse insurance, a variant of insurance that covers earth movement resulting in specific types of damage. However, it is important to note that not all sinkholes will be covered by this type of insurance. For example, in Florida, insurers are required to provide "catastrophic ground cover collapse" coverage as part of a standard homeowners policy. But this only applies when the sinkhole results in the following:

• Abrupt collapse of the ground cover
• A visible depression in the ground cover
• Structural damage to the building, including the foundation
• Condemnation of the structure and an order by government authorities to vacate the premises

In Florida, Citizens Property Insurance Corp. offers sinkhole insurance to homeowners, covering damage and losses due to sinkholes caused by natural phenomena. This insurance is available as an optional endorsement for Modified Homeowners (HO-8) policies, Dwelling Property (DP-1 and DP-3) policies with building coverage, and Tenant Contents, Condominium, and Mobile Home policies, which automatically include sinkhole loss coverage.

While sinkhole insurance can be costly, it may be worth considering if you live in an area where sinkholes are common. The cost of sinkhole insurance will depend on the state you live in and the specific details of your property. In some Florida counties with a history of sinkholes, for instance, sinkhole insurance may cost around $2,100 per year, which is more than the average homeowners insurance policy in the state.

Citizens Property Insurance Corp offers sinkhole insurance to Florida homeowners

Citizens Property Insurance Corporation (Citizens) is a government-run, not-for-profit entity that provides insurance for Florida homeowners who cannot get insured elsewhere. It was established by the Florida Legislature in 2002 to provide insurance for those in high-risk areas, following the devastation of Hurricane Andrew in 1992.

Citizens offers sinkhole loss coverage as an optional endorsement for several policies, including Modified Homeowners (HO-8) and Dwelling Property (DP-1 and DP-3) with building coverage. Condominium policies automatically include sinkhole loss coverage. This coverage protects homeowners from structural damage to their homes caused by confirmed sinkhole activity.

It is important to note that sinkhole loss coverage is different from catastrophic ground cover collapse coverage, which is automatically included in most Citizens policies. Catastrophic ground cover collapse coverage only applies when geological activity results in the following conditions:

• Abrupt collapse of ground cover
• A depression in the ground cover that is visible to the naked eye
• Structural damage to the building, including the foundation
• Condemnation of the structure and an order by government authorities to vacate the premises

Since 2006, Citizens has received more than 15,000 sinkhole-related claims. To protect policyholders from rising sinkhole loss coverage costs, Citizens requires sinkhole inspections for properties that meet certain conditions. Even if a property does not qualify for sinkhole loss coverage, it may still be eligible for regular Citizens coverage, which includes catastrophic ground cover collapse coverage.

Sinkhole insurance can be purchased as an add-on to a standard homeowners insurance policy

In Florida, sinkholes are not a rare occurrence. They are naturally occurring, but human impact on the environment is making them worse. While not every Floridian needs sinkhole insurance, it is a good idea to have it if you can afford it.

Home insurance policies typically do not cover sinkhole damage. However, in Florida, insurance companies are required to offer sinkhole coverage as an add-on to a standard homeowners insurance policy. This is because Florida has more sinkholes than any other state.

There are two main types of sinkhole insurance: sinkhole loss coverage and catastrophic ground cover collapse coverage. Sinkhole loss coverage is an insurance endorsement that typically covers man-made sinkholes, including those related to mining operations. It may or may not cover naturally occurring sinkholes. Catastrophic ground cover collapse coverage protects your home if it falls into a sinkhole, and the foundation is damaged beyond repair. This type of coverage is only available in Florida and is required. To qualify for this coverage, your home must be condemned by a local government agency.

Florida Statute 627 requires all insurance companies in the state to offer sinkhole insurance. When you apply for a sinkhole insurance policy, the insurance company may send someone to your property to look for any existing structural damage. They may also test the land to determine the probability of a sinkhole occurring.

The cost of sinkhole insurance in Florida is typically between $2,000 and $4,000 per year. The cost will depend on factors such as the state you live in and the details of your property, such as the size of your house.

Frequently asked questions