What is the difference between Sinkhole Coverage and Catastrophic Ground Collapse Coverage?

Attention Sunshine State! Unfortunately, hurricanes aren't the only thing you need to worry about when it comes to homeowners insurance. More than 6,500 Florida sinkhole insurance claims are filed each year. Yikes!

According to the US Geological Survey, an estimated 35-40% of the US is at risk to sinkholes. In addition to Florida, I'm looking at you Kentucky, Tennessee, Missouri, and Texas.

The good news is you can protect yourself with the proper homeowners insurance, though you will need to do some extra work to understand how to get coverage. Most homeowners policies will NOT provide coverage for sinkholes or catastrophic ground cover collapse by default. However, there are add-ons to the policy that allow you to get protection from this type of natural disaster. But here is the crazy thing, while the two terms actually sound similar, they mean different things. So having coverage for "catastrophic ground cover collapse" does not mean you have coverage for a "sinkhole."

Florida law requires carriers to offer coverage for catastrophic ground cover collapse, defined as geological activity that results in ALL of the following (so all 4 conditions MUST be satisfied):

  1. The abrupt collapse of the ground cover
  2. A depression in the ground cover clearly visibly to the naked eye
  3. Structural damage to the building including the foundation
  4. The insured structure being condemned and ordered to be vacated by the government agency authorized by law to issue such an order for that structure

Florida law defines sinkholes as:

  1. A landform created by subsistence of soil, sediment, or rock as underlying strata are dissolved by ground water

Note that "sinkhole coverage" is much more broad so it is a better coverage if you have a choice. This is because there are scenarios where "ground cover collapse coverage" will not cover damage from a sinkhole if all 4 points above are not satisfied. For example, if a sinkhole causes foundational cracks in your home, but your home is still livable, your insurance will not pay for the damages if you have "ground cover collapse coverage". 

Before buying a home, ask the inspector to check for signs of sinkhole activity. If the risk is high, you may have a hard time finding affordable home insurance.

Check your homeowners insurance quotes with sinkhole coverage here:

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At your service,
Young Alfred