What’s the difference between standard sinkhole insurance coverage and catastrophic ground cover collapse?

Prior to 2008, every insurance company that sells property insurance in Florida was mandated to provide sinkhole insurance coverage, as provided for pursuant to Section 627.706, Florida Statutes. Under that statute, sinkhole activity was defined as “the sudden settlement or collapse of earth supporting such property resulting from the creation of subterranean voids created by the action of water on a limestone or other similar rock formation.”

That’s a lot of geology to come to this: There are rock layers beneath your home, which water can actually dissolve. When this happens, holes open up beneath the ground and can actually impact the surface where your home is located.

Before and After Catastrophic Collapse Option

Sinkhole insurance coverage for property insurance losses has been around for decades. However, in the past two years, the State of Florida authorized insurance companies to offer an option, which will save some property owners in some counties on their insurance premiums. This new coverage, which substitutes for sinkhole damage coverage, is called catastrophic ground cover collapse.

Previously, if sinkhole activity damaged your house, it was covered by the homeowner’s sinkhole insurance plan, even if the actual damage to your house was limited or gradual in nature. Nearly all geologists agree that sinkhole losses, when they do occur, do not result in catastrophic losses. Instead, the damage presents itself as stair-step cracks, internal tile damage, or deflection in the roof.

In my experience as a sinkhole lawyer, fewer than one percent of losses result in a cataclysmic event, where the home becomes uninhabitable, rendering this sinkhole insurance coverage nearly useless to homeowners.

Read more about the dangers of relying on catastrophic ground cover collapse for your sinkhole insurance needs.

Have a burning question you’d like to ask about sinkholes? Let us know.