Jane Dotson
Sinkholes are a rare but potentially catastrophic natural phenomenon that can cause significant damage to homes and personal property. Standard homeowners insurance policies typically exclude coverage for sinkholes, leaving many vulnerable to the financial burden of repairs. While the probability of a sinkhole occurring is low, the consequences can be devastating, and the cost of repairing a foundation can easily exceed $10,000 on average. This has led to the emergence of sinkhole insurance as a specialised offering, which begs the question: is it worth purchasing this additional coverage?
| Characteristics | Values |
|---|---|
| What is sinkhole insurance? | A policy that covers damage to your house and belongings caused by a sinkhole. |
| Is it necessary? | Not necessary unless you live in an area prone to sinkholes, such as Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas. |
| Is it included in homeowners insurance? | No, it is usually excluded by standard home insurance policies. |
| How much does it cost? | Expensive. In some Florida counties, it may cost around $2,000–$4,000 per year. |
| How to get it? | It can be added as an endorsement to your homeowners insurance policy. Some states, like Florida and Tennessee, require insurance companies to offer it as an optional coverage. |
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What You'll Learn
Sinkhole insurance cost
The cost of sinkhole insurance varies depending on several factors, including the location of the property, the probability of a sinkhole occurring, and the value of the property.
In general, sinkhole insurance is considered expensive. In high-risk areas, such as Florida and Tennessee, sinkhole insurance may be required to be offered by insurance companies as an endorsement or stand-alone policy. In some Florida counties with a history of sinkholes, sinkhole insurance can cost around $2,100 per year, which is higher than the average homeowners insurance policy in the state. The annual cost of sinkhole insurance can range from $2,000 to $4,000, according to Insurance Navy.
Before purchasing sinkhole insurance, insurance companies may require a geological survey of the property to assess the risk of a sinkhole collapse. The customer is typically responsible for the cost of this survey.
It is important to note that sinkhole insurance is not typically included in standard homeowners insurance policies. Homeowners may need to purchase additional coverage or add sinkhole insurance as an endorsement or rider to their existing policy, which will increase the overall cost of their insurance.
When considering sinkhole insurance, it is recommended to weigh the cost of the coverage against the risk of experiencing a sinkhole. While sinkholes are rare, they can be catastrophic and occur in certain states more commonly, such as Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas.
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What does sinkhole insurance cover?
Sinkhole insurance is an insurance policy that covers damage to your house, unattached structures (like a shed), and personal property caused by a sinkhole. It is typically added as an endorsement to a homeowners insurance policy.
There are generally two types of sinkhole insurance: the first is sinkhole insurance as an endorsement to your home insurance, and the second is catastrophic ground cover collapse, which is a separate type of insurance that covers a slightly different type of loss than sinkhole insurance.
In some cases, sinkholes may be covered by catastrophic ground collapse, an insurance variant for earth movement that causes specific kinds of damage. Catastrophic ground cover collapse is only available in Florida, and damage to your house and belongings is only covered if it meets the following four criteria:
- The ground must abruptly collapse.
- There must be a clearly visible depression in the ground.
- Your property or its foundation must undergo structural damage.
- The government must condemn your property and require you to vacate.
It's important to note that standard homeowners insurance policies typically exclude coverage for earth movement, including sinkholes. However, you may be able to add sinkhole insurance coverage to your homeowners policy as an endorsement or rider, which will come at an additional premium.
Before purchasing sinkhole insurance, it's recommended to consult a professional study or research the history of your area to judge the probability of a future sinkhole. Sinkhole insurance can be expensive, so it's essential to balance your property's risk with the cost of coverage.
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States that require sinkhole insurance
Sinkhole insurance is an optional coverage type that covers damage caused by sinkholes to your house, unattached structures, and personal property. While sinkholes are rare in the United States, they are more common in certain states, including Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas.
In Florida and Tennessee, homeowners insurance companies are required to offer sinkhole insurance as an optional coverage. Florida insurers are also mandated to provide "catastrophic ground cover collapse" coverage as part of the standard homeowners policy, which is slightly different from sinkhole insurance. This coverage must meet specific criteria, including the abrupt collapse of the ground, visible depression in the ground, structural damage to the property, and the condemnation of the insured structure by a governmental agency.
In Florida counties with a history of sinkholes, the annual premium for sinkhole loss coverage can exceed the average cost of a homeowners insurance policy in the state. The cost of sinkhole insurance reflects the probability of a sinkhole occurring in a given area, with higher-risk areas commanding higher premiums.
While sinkhole insurance can be expensive, it may be essential for homeowners in high-risk areas. Homeowners in these areas should consult professional studies or the history of their region to gauge the likelihood of a future sinkhole and make an informed decision about purchasing sinkhole insurance.
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How to get sinkhole insurance
Sinkhole insurance is an insurance policy that covers your house, unattached structures (like a shed), and personal property for damage caused by a sinkhole. It is typically added as an endorsement to a homeowners insurance policy.
If you live in an area prone to sinkholes, such as Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas, it is worth considering sinkhole insurance. Homeowners insurance companies in Florida and Tennessee are required to offer sinkhole insurance as an optional coverage. However, some insurance companies include sinkhole insurance as part of their policies. For example, Erie Insurance includes sinkhole coverage for policyholders in Tennessee.
Before purchasing sinkhole insurance, it is important to understand the different types of sinkhole insurance:
- Sinkhole insurance as an endorsement to your home insurance: This is typically added as an additional coverage to your existing homeowners insurance policy. It is important to note that this may increase your premium.
- Catastrophic ground cover collapse: This coverage is only available in Florida, and home insurance companies in Florida are required to provide this type of insurance. However, damage to your house and belongings is only covered if specific criteria are met. These criteria include abrupt collapse, visible depression in the ground, and structural damage to your property or its foundation.
- Stand-alone sinkhole policy: If you cannot get coverage through your insurer, you may be able to purchase a stand-alone sinkhole policy. For example, homeowners in Missouri may be able to purchase a stand-alone policy through the Missouri FAIR plan.
When considering sinkhole insurance, it is recommended to consult a professional study or research the history of sinkholes in your area to assess the probability of a future sinkhole. Additionally, you may need to have an inspection or geological survey done on your property before an insurer will issue a sinkhole endorsement. The customer is usually responsible for the cost of the survey.
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Is sinkhole insurance included in homeowners insurance?
A standard homeowners insurance policy typically does not include sinkhole insurance coverage. Sinkholes are usually categorized as "earth movement" and are listed under the exclusion section of a home policy, along with earthquakes, landslides, mudslides, and mudflows.
However, you may be able to purchase a separate sinkhole insurance policy or add coverage for sinkholes to your current homeowners policy as an endorsement, policy rider, or add-on. Some insurance companies include sinkhole insurance as part of their policies, and in some states, such as Florida and Tennessee, insurance companies are required to offer sinkhole insurance as an optional coverage.
Before purchasing sinkhole insurance, it is important to note that it can be very expensive, with annual premiums in some high-risk areas exceeding the average cost of a homeowners insurance policy. Additionally, some sinkhole insurance policies only cover man-made sinkholes, while others will cover naturally occurring sinkholes. It is also worth noting that sinkhole insurance may be limited to events caused by previous mining operations, and a geological survey of your property may be required before issuing a policy.
In summary, while sinkhole insurance is typically not included in homeowners insurance, it may be purchased separately or added to an existing policy in most states. However, due to the high cost and varying levels of coverage, it is important to carefully consider the risk level of your property and the specific details of the sinkhole insurance policy before purchasing.
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Frequently asked questions
Sinkhole insurance is an insurance policy that covers your house, unattached structures (like a shed), and personal property for damage caused by a sinkhole.
No, sinkhole insurance is not typically included in homeowners' insurance. You may be able to add it as an endorsement or rider to your current policy, but this will increase your premium.
The cost of sinkhole insurance depends on the insurance provider and the risk of a sinkhole occurring in your area. In some Florida counties, sinkhole insurance may cost around $2,000 to $4,000 per year.
Many major insurance companies, such as Nationwide, Travelers, and USAA, offer sinkhole endorsements in high-risk areas. Local companies may also offer sinkhole insurance to at-risk communities. Insurance companies in Florida and Tennessee are required to offer sinkhole insurance.
Sinkhole insurance is worth considering if you live in an area prone to sinkholes, such as Alabama, Florida, Kentucky, Missouri, Pennsylvania, Tennessee, and Texas. The cost of repairing your foundation alone can exceed $10,000 on average, so sinkhole insurance can provide valuable financial protection in high-risk areas.
