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Sinkholes and catastrophic ground collapse can cause extensive damage to your home. With catastrophic ground collapse, the ground gives out and causes structural damage to a building and its foundation.
Sinkholes — which can cause catastrophic ground collapse — typically occur in states like Alabama, Florida, and Texas. In these areas, it’s easier for water to collect underground and dissolve the rock below the surface. If you live in a state with a high risk of sinkholes, it’s important to understand what catastrophic ground collapse coverage is and how it works.
Here’s what you need to know about catastrophic ground collapse coverage:
- What is catastrophic ground collapse coverage?
- Does my homeowners insurance policy cover catastrophic ground collapse?
- How does catastrophic ground collapse coverage work?
- Catastrophic ground collapse vs. sinkholes
- Catastrophic ground collapse coverage vs. sinkhole coverage
- How much does catastrophic ground collapse coverage cost?
- Who needs catastrophic ground collapse coverage?
- Should I have both catastrophic ground collapse coverage and sinkhole insurance?
What is catastrophic ground collapse coverage?
Catastrophic ground collapse coverage is a form of insurance that kicks in if your home becomes uninhabitable due to a ground collapse. It’s different from sinkhole insurance, which is a separate coverage you must purchase if you want to cover smaller instances of damage that sinkholes cause.
Does my homeowners insurance policy cover catastrophic ground collapse?
Most standard homeowners insurance policies exclude damage caused by earth movement, such as ground collapse. However, in Florida, insurers are required to make catastrophic ground collapse coverage part of a standard homeowners insurance policy.
In addition, insurance carriers in Florida and Tennessee must offer sinkhole coverage either as an optional rider (add-on) to your home insurance policy or as a stand-alone policy.
- Abrupt collapse of ground cover
- Structural damage to a covered building, including the foundation
- Depression in the ground cover that’s clearly visible
- The insured structure is condemned and ordered to be vacated by the appropriate government agency
If your standard homeowners insurance policy does include catastrophic ground collapse coverage, it’ll cover the costs to repair or replace your home (up to your coverage limit) as well as your personal belongings, since personal property coverage is around 50% to 70% of the insurance you have on the structure of your home.
Your policy’s additional living expenses or loss of use coverage will also cover the costs of living away from your home if it’s deemed uninhabitable due to catastrophic ground collapse or a sinkhole.
See Also: What Does Homeowners Insurance Cover?
How does catastrophic ground collapse coverage work?
If your home has damage from a catastrophic ground collapse and you’ve evacuated to a safe place, it’s time to contact your insurer. Ask to file a claim and provide any photos and supporting information. You should also notify your city or county building inspection department. An engineer or geologist will come out and assess the damage.
In order for catastrophic ground collapse coverage to kick in after you pay your deductible, the damage must meet all four criteria explained earlier. This means the damage should be physically visible with structural damage clearly present, and the home must be deemed uninhabitable. Your insurance provider will also likely perform geological testing to determine whether a sinkhole was the cause of the damage.
Catastrophic ground collapse vs. sinkholes
Sometimes, people may refer to a catastrophic ground collapse as a sinkhole, but the two shouldn’t be used interchangeably since they have some key differences.
Florida law provides a definition for both sinkholes and catastrophic ground cover collapse. A sinkhole is “a landform created by subsidence of soil, sediment, or rock as underlying strata are dissolved by the groundwater.” Meanwhile, a catastrophic ground collapse is considered a geological activity that causes severe damage to a building’s structure and its foundation.
Here’s a breakdown of how a catastrophic ground collapse compares to a sinkhole:
|Catastrophic ground collapse||Sinkhole|
|Can cause structural damage to a home||Yes||Yes|
|Commonly occurs in Florida||Yes||Yes|
|Visible damage seen above ground||Yes||Not always|
Catastrophic ground collapse coverage vs. sinkhole coverage
Homeowners insurance policies that include catastrophic ground collapse coverage will reimburse you for damage from this event so long as the four criteria are met. On the other hand, sinkholes are typically only covered if you have additional sinkhole coverage.
You can purchase sinkhole coverage for an additional premium. This includes coverage for your home, personal belongings, and additional living expenses if the structural damage is proven to be caused by a sinkhole.
Since sinkhole coverage must be purchased separately, and sinkholes are expensive to repair, deductibles are higher — they can range from 1% to 10% of your dwelling’s coverage limit. This means if you have $200,000 in dwelling coverage, your deductible could be as much as $20,000 at 10% of your dwelling policy limit.
Here’s a quick comparison of catastrophic ground collapse coverage and sinkhole coverage:
|Catastrophic ground collapse coverage||Sinkhole coverage|
|Covered by basic homeowners insurance policies||No (except in Florida)||No|
|Available as an endorsement or separate policy||No||Yes|
How much does catastrophic ground collapse coverage cost?
If you live in Florida, catastrophic ground collapse coverage is part of your standard homeowners insurance policy, and the price varies depending on factors such as your claim history and the size of your home. The same is true if you purchase sinkhole insurance.
Who needs catastrophic ground collapse coverage?
Catastrophic ground collapses occur in certain areas of the country that are prone to sinkholes. If you live in any of these states, you may want to consider buying coverage:
Check with city officials to find out if any catastrophic ground collapses have occurred and when. You may also consider reviewing your home inspection report or getting a new one to see if your home has had any cracks in the walls or foundation issues.
Should I have both catastrophic ground collapse coverage and sinkhole insurance?
While sinkhole coverage is more broad, it’s also more expensive. Catastrophic ground coverage has stricter criteria but it’ll provide the coverage you need if all four criteria are met.
Still, an insurer can decline coverage for your property after the inspection. If you’re in an area that’s at risk, examine this potential risk more carefully by contacting your state’s geological survey and consulting with your insurer to see what both coverage options include. This way you can prevent any future claims from being denied.
Finally, weigh this against the cost of having both coverages and deductibles. Remember, since the damage can be severe and extremely expensive, you could save thousands of dollars with insurance even after paying your deductible.
Read More: Home Insurance Claim Denied? Why It Happened and What to Do