During your review of your homeowners insurance quote and/or policy, you may notice some interesting language within it that states sinkhole coverage is not coverage included in your policy. If you’re new to Florida, you may not realize how common sinkholes are and how quickly they can cause severe devastation to your home. So why doesn’t your homeowners insurance cover it?
Most local insurance agents we hear about shrug off the sinkhole question and simply say “You don’t need it!”, but I would bet many of them cannot even explain how the coverage does or does not apply. First, it’s important to realize that with regards to Florida Homeowners Insurance issued under the HO3 form by a state authorized insurance carrier – there are two types of coverage associated with damage stemming from what most people consider to be a sinkhole. One is called ‘catastrophic ground collapse coverage’ and the other is called ‘sinkhole coverage’.
Catastrophic Ground Collapse Coverage
Florida law (FL Statute 627.706) states that every insurer authorized to transact property insurance in this state must provide coverage for a catastrophic ground cover collapse. This means your homeowners insurance policy includes this coverage and it cannot be removed or taken away. Florida law also provides a clear definition for the distinction – it states that catastrophic ground cover collapse does not occur until all of the following four conditions have been met:
1. There is an abrupt collapse of the ground cover.
2. There is a depression in the ground cover clearly visible to the naked eye.
3. There is structural damage to the building and its foundation.
4. The structure is condemned and ordered to be vacated by the local government agency responsible for issuing condemnation orders.
The statute also clearly states “damage consisting merely of the settling or cracking of a foundation, structure, or building does not constitute a loss resulting from a catastrophic ground cover collapse.”
You’ve likely seen stories of sinkholes forming in neighborhoods nearby on the local news. Many of them meet the criteria to be called “Catastrophic Ground Collapse”, and if so than those persons homeowners insurance policies would have provided coverage.
So, what is actual 'Sinkhole coverage"? Sinkhole coverage provides coverage for "sinkhole activity" which is defined as: Settlement or systematic weakening of the earth supporting such property only when such settlement or systematic weakening results from movement or raveling of soils, sediments or rock material into subterranean voids created by the effect of water on limestone or similar rock formation.
Insurance companies separated the coverage definitions and how they apply this way because they do not want to cover damage such as cracks, holes, and other damage associated with ground settlement - such things are common and are almost expected to occur after a home is built and truly 'settles'.
If you are unsure of what type of coverage your policy provides, give our team of insurance agents at Evolve Insurance Agency a call today or visit us on our quote page here. We’d be more than happy to review your current coverage and let you know what other agents tend to leave out – and that includes sinkhole coverage!
Owner, Evolve Insurance Agency
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