How to Buy Sinkhole Insurance

Learn how to insure your home from sinkhole damage or destruction.

Sinkhole insurance, or "catastrophic ground cover collapse" as states such as Florida term it, covers the insured in case his home or property is damaged because of a sinkhole. A sinkhole occurs when there is a sudden collapse in the ground. If there is a home, cars or other property sitting on the area that collapses into a sinkhole, it can cause severe structural damage or completely destroy the object. Buying sinkhole insurance is similar to buying other types of insurance policies. According to the USGS, states such as Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and Pennsylvania are the most prone to sinkhole occurrences and damages.

Instructions

1. Contact the insurance agent that manages your policies such as auto insurance, homeowners insurance or renters insurance. Find out if he is offering sinkhole insurance. You can also contact the Office of Insurance Regulation for your state. This office maintains a list of insurance companies that offer sinkhole insurance policies.

2. Identify the coverage terms and conditions, such as the total amount of coverage, deductibles, premiums and what is and what is not covered by the policy. You should obtain this information from at least three insurance providers so you can contrast and compare each of the policies. This type of comparison allows you to choose the policy that best fits your coverage needs, amounts and other terms and conditions.

3. Pay the premium. Once you choose the policy and the insurance provider, submit the application for sinkhole coverage. The application goes to the insurance underwriter, who then approves or denies your coverage. Once the coverage is approved, insurance providers typically require one to two months worth of premium payments up-front to start the policy. After the up-front deposit, you can typically opt to make premium payments monthly, quarterly or annually going forward.

Tips & Warnings

• Insurance companies use a sinkhole map to determine if you home sits in a sinkhole area. If the home sits in an area prone to sinkholes, the mortgage lender on your home may require you to obtain sinkhole insurance.

• A standard homeowners insurance policy does not typically cover sinkhole damage or "catastrophic ground cover collapse."

• Check with your homeowners insurance policy insurer and ask specifically if your policy covers sinkhole damage prior to establishing a sinkhole policy.

• Some states, such as Florida, have a statewide coverage company that deals with sinkholes.

References

• Heartland: Florida Sinkhole Insurance Law
• USGA: Sinkholes
• Florida Department of State: Sinkhole Insurance FAQs

Resources

• Read this Article in Spanish