Natural disasters have been the cause of some of the scariest events in history. There is nothing that can be done to prevent them, and they are completely unpredictable. We are totally at nature’s whim. Take sinkholes for example; sinkholes are an extremely underrated form of natural disaster. They rip open the ground into massive holes that can swallow entire houses. Compared to earthquakes and severe weather storms, sinkholes do not have as high mortality rates, but due to their regular and volatile natures, they pose one of the highest threats to home and property owners as the after effects require specialized sinkhole insurance.
Why Should I Care About A Sinkhole?
So, what exactly is a sinkhole? A big hole? Yes. Essentially, it’s a pothole gone wild.
Sinkholes can be formed by one of two ways, by either man or by nature.
Man-made sinkholes are stimulated by excessive mining, drilling, or construction that have weakened the earth below the ground and caused cavernous areas that eventually collapse into themselves.
In the recent century, sinkhole rates have actually climbed due to the collapse of man-made holes. Construction rates have consistently risen, which have caused pressures above the surface to stimulate sinkholes.
Natural sinkholes are typically caused by water erosion underneath the ground that breaks down the bedrock and dirt that supports the surface. Water runoff from plants and surface rocks turns it acidic, which makes the softer minerals below ground more susceptible to be broken down as the water travels deeper into the soil.
This movement of the water causes underground tunnels, caverns, and air pockets within the bedrock that weaken the support system of the surface. Then the pressure of the lack of support below the ground causes a rupture in the surface, which then causes everything around that crack to sink into itself, resulting in a massive cavity.
Depending on how much corrosion occurred underneath the surface, sinkholes have no limit in their size or where they can occur, which means they have no limit to the damage they can cause.
The sinkhole that is created can happen anywhere and underneath anything, and as the ground is falling apart, it can take houses, cars, people into the hole along with it.
When you wish for the ground to swallow you whole, you’re wishing for a sinkhole.
But sinkholes are completely unpredictable. Science can detect where one might be, but not when it will happen. And obviously, no one can see below the Earth’s surface with their naked eye.
Some sinkholes take years to fully sink, but they could suddenly shift and finish collapsing at any moment. One could form at any point and at any time and cause a tremendous amount of damage to yourself, your house, your car… anything. They show no mercy.
There is no way to prevent a sinkhole, but there is a way to prevent the damage they cause from completely ruining your life: sinkhole insurance.
When a disaster happens, rarely anyone is financially or mentally prepared to deal with the consequences of it, especially with something as random as a sinkhole. Therefore, the best option is to ensure your property as best you can, just in case.
What Is Sinkhole Insurance?
Because natural disasters are financially catastrophic, insurance companies have begun to offer policies that cover them if one should happen.
Before, insurance companies tried to avoid paying for household damages caused by natural disasters like sinkholes by excluding it from homeowners insurance clauses. They did this because it is hard to predict a sinkhole, and it is expensive to cover.
But now, some companies have realized how common sinkholes can be and decided that those damages should be covered, too. (You know, since it’s their job to help.)
What do these policies cover?
Basically, sinkhole insurance policies cover damages to and loss of personal property and belongings. If the structure or foundation of a home or building is damaged, the insurance company would give monetary compensation to either repair the damage or replace it.
Although, personal belongings and other properties are only covered by sinkhole insurance if they were damaged while inside the insured building at the time of the sinkhole occurred.
Some insurance policies also cover the payment for preventative measures on homes or buildings in a high-risk area, which is usually bracing around the structure of the building, but these are rare.
There are two common types of sinkhole insurance policies offered: Sinkhole Loss Coverage and Catastrophic Ground Collapse (These can vary according to different insurance companies, but most who offer sinkhole insurance will have policies similar to these.) Some insurances may offer one type and not the other, and rarely do they offer both; it mostly depends on the area in which you live. Both policies focus on giving reparations to homeowners after a sinkhole occurs.
1. Sinkhole Loss Coverage
This is the most basic form of sinkhole insurance, and it is the most common. The coverage it provides is very minimal, only covering what is lost in the event of a sinkhole, and it is usually treated as an added-on endorsement to homeowners’ insurance policies.
The Sinkhole Loss Coverage policy was initially created to cover damages from sinkholes caused by coal mining, and because of this, some policies, like those attached to bigger-named insurances, only cover man-made sinkholes. They completely exclude any natural sinkholes. Although, some policies do the opposite, and they exclusively deal with natural sinkholes.
Typical Sinkhole Loss Coverage policies are also usually accompanied by a geographical survey done on the property in question to determine if the area is at risk for a sinkhole.
If the building or home is found to be on an area that could potentially have a sinkhole–like if the ground is exceptionally soft and porous– then the insurance company would deem the property at a high-risk, causing the monthly rates to be very high.
2. Catastrophic Ground Collapse
This policy is much more exclusive in what damages it covers and its qualifications for coverage. It is found only in states that have a history of being prone to sinkholes. For example, Florida and Tennessee legally require their homeowners to have this insurance attached to their properties because their lands are commonly damaged by sinkholes.
Technically, this policy covers any form of ground collapse and not just sinkholes exclusively, but it is applied most in cases dealing with sinkholes.
If damages are caused to an insured building under this policy, the damages must meet four stipulations in order to be filed on the insurance:
- The collapse must have been sudden and unexpected.
- The ground must have a dent in it that is clearly visible to the naked eye.
- The insured building/home must have structural damage to it.
- The insured building must be so damaged that it is deemed condemned and unlivable by the government.
If the insured and damaged building does not meet all four of these criteria, then the insurance policy does not cover the damage done at all. If there are simply cracks in the foundation of the insured building, the Catastrophic Ground Collapse policy will not cover it.
This policy usually costs more than the other, thought, because the damages it is meant to cover are for a last-resort-type situation. It has so many requirements because it ensures that it cannot be relied upon until absolutely necessary.
When comparing the two types of sinkhole insurance, the Sinkhole Loss Coverage would cover more of the damages caused by a sinkhole. The Catastrophic Ground Collapse policy requires so many criteria to be met that it excludes those that meet in the gray area; their homes are not condemned, but the homes are not exactly livable, either.
For basic but more reliable coverage, the Sinkhole Loss Coverage will ensure more of your property than the other. It probably would not result in as much compensation, but it would be a more reliable option to have just in case.
What Doesn’t Sinkhole Insurance Cover?
Sinkhole insurance can be reliable, but it is not all encompassing. Most policies will compensate for damages to a building, home, or car—items of major expense.
This adheres to what is called the roof-and-wall policy, meaning anything not under the roof of a damaged building will not be covered by sinkhole insurance policies.
For example, things like concrete sidewalks, driveways, patios, decks, pools, or outside decor are not covered. They also do not cover open lands, fields, parking lots, or roads.
And of course, insurance policies will give a little compensation to replace personal belongings lost in a sinkhole, but they will not replace any lost personal artifacts like pictures.
Why Should I Get Sinkhole Insurance?
When looking at insurance companies and their policies on sinkhole coverage, it is most important to know the risk of them in your area to decide if it is a necessity for you.
The term ‘high-risk’ area has been mentioned quite a few times, but what exactly does this mean?
There are certain types of soil and areas that are more prone to sinkholes than others. Places that were heavily mined throughout history are more susceptible to them because of the man-made holes underneath the surface.
These are considered high-risk areas because the underground support system has been compromised and the old mine shafts could easily collapse at any minute.
If an area has exceptionally soft and soggy soil, or if the underlying bedrock is made of very soft minerals like limestone or are high in salt and carbon deposits, then it is very prone to sinkholes because water is constantly flowing through the ground and creating porous pathways and caverns. In the United States, upwards of 40% of the yearly average for sinkholes occur in Florida, the swampiest state.
Florida requires its homeowners to have sinkhole insurance, specifically the Catastrophic Ground Collapse policy. Florida’s soil has a soggy quality that has been scientifically proven to be the cause of its high sinkhole rates. The soil’s high-water content moves the dirt underneath the surface constantly, which can unexpectedly cause the foundational dirt underneath the surface of the ground to suddenly wash away and take down a house with it.
Even though Florida is the soggiest state with the highest probability of sinkholes occurring, the state follows a no-fault system, which mainly just means the state doesn’t want to be responsible for paying for any personal injuries or settlements.
This law was created to prevent people from falling back onto the state financially in case of a car crash and forces them to seek damage recompense through personal insurance, but the law also makes it so that damages wrought due to a sinkhole must be recovered through personal insurance.
If the state of Florida won’t assist its people in the event of a natural disaster, then sinkhole insurance is an absolute necessity for such a high-risk area. If a sinkhole caused a home to completely collapse into the cavity, the average person would not be able to pay out-of-pocket to fix or replace their home. In a high-risk area, the risk actually comes from not having sinkhole insurance, not the sinkhole itself.
Of course, Florida is not the only high-risk state, and sinkholes are not only found in its surrounding states. They occur all over the country. Pennsylvania has the second highest number of sinkholes per year, and Texas is home to the largest sinkhole in the country. It is important to research your area and know whether or not you reside in a high-risk area that is prone to sinkholes.
In summary, sinkholes are more common than people think they are, and they pose a very real threat to homeowners. And because they are so erratic, it is best to prepare for the worst and ensure your home and belongings, especially if you live in an area that is prone to sinkholes. And if you do, get sinkhole insurance.
In the event that a sinkhole damages your home property and you need help with the hassle of dealing with your home insurance company, reach out to Bulldog Adjusters for a free damage estimate and help with your claim!