Sinkholes can happen at a moment’s notice. The likelihood of one happening to you and destroying your property is rare but still present. Around 35-40% of all land in the United States is susceptible to sinkholes and your home could be located in one of those regions. While the likelihood of a sinkhole happening below your property is low, being protected with sinkhole insurance might be the best path.
States like Pennsylvania, Kentucky, Missouri, Florida, and Tennessee are susceptible to sinkholes. Homeowners in these states might find it beneficial to seek out a proper sinkhole policy to add to their basic homeowners insurance.
Types of sinkhole insurance
Two types of sinkhole insurance exist – Sinkhole Loss Coverage and Catastrophic Ground Collapse.
Sinkhole Loss Coverage
With Sinkhole Loss Coverage, you are adding an endorsement to your homeowners policy that will cover you in the event of sinkhole damage. This endorsement often has specified limits that bind the policy to only cover mining-related sinkholes. Sinkholes occurring naturally are sometimes excluded from protection.
Catastrophic Ground Collapse
Catastrophic Ground Collapse coverage is only required in Florida and Tennessee and has rather strict stipulations for qualification. For a sinkhole to qualify for protection it must be an abrupt collapse of the ground, be clearly visible without use of professional instruments, cause structural damage to the building covered, and the building damaged must be condemned and vacated. For Catastrophic Ground Collapse to cover your home, the sinkhole must swallow your property. If cracks occur in your home but the building is not condemned, you will not be covered.
The sinkhole insurance that exists is rather strict with what they will protect, and often times a sinkhole might not qualify for protection. Sinkhole Loss Coverage will only protect from human error holes and Catastrophic Ground Collapse will cover more natural cases. Both policies will be endorsements added to your basic homeowners policy.
Is sinkhole insurance worth it?
If you live in an area where sinkholes are common, sinkhole insurance might be necessary. Protecting your home from the unexpected is what insurance does, and while sinkholes are unlikely, it’s better to be protected in the event one does occur. Your basic homeowners insurance policy will not protect you from a sinkhole or an earthquake so a separate policy or an endorsement will be required. Speak with an insurance agent soon to find out what sinkhole options you have moving forward.
Sinkhole insurance cost
Sinkhole insurance can be expensive and most likely will not be used. Sinkholes are rare and there is less than a 1% chance of one damaging your property. With that in mind, you’ll have to weigh the pros and cons of purchasing a policy. If your state is more susceptible to sinkholes, insurance will be more expensive as the likelihood of you filing a claim is greater. Some areas are looking at an annual cost of $2,100 for a sinkhole policy.
Sinkhole insurance is expensive but when you need it, it’s more than helpful. Sinkholes can completely ruin a home and when one opens under your property, the foundation of your home can be compromised. Sinkhole insurance will help cover you and your home in the event of a total loss resulting from a sinkhole.
