Sinkholes - Coming To A Home Near You

Imagine waking up to find the basement of your residence swallowed by a sinkhole.  That's just what happened to a couple renting a home in Cincinnati early this morning.   Luckily, no one was injured in the geological event.

You may remember the deadly sinkhole in Florida that claimed the life of 37 year-old Jeff Bush while he was sleeping in his bed. Since that event, neighboring homes in Seffner, Florida,  have been condemned and are being demolished.

Sinkholes are depressions in the surface of the land caused by the sudden settlement or collapse of the land.   According to a U.S. Geological Survey, sinkholes are found all over the world.   In the U.S., sinkholes are especially common in Florida, Missouri, Tennessee and Kentucky.

So, is the damage caused by a sinkhole covered on your homeowners policy?   In most states, NO.  In the states of Florida and Tennessee,  insurers are required by law to offer sinkhole coverage for an additional premium.  In other states, if the carrier offers the coverage, a homeowner can elect to purchase it for an additional premium.

Be aware that this optional sinkhole collapse endorsement covers only the  "actual physical damage arising out of, or caused by, sudden settlement or collapse of the earth ."  Emphasis on "actual physical damage".  So if your neighbor's home is damaged by a sinkhole and your home is condemned because of a potential sinkhole underneath, is there actual damage to your home?  The coverage you paid for may not apply.

Good news for Florida residents.  Because sinkholes are so common, the mandated coverage does pay for expenses when the home is "being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that structure."

As for businesses, most commercial insurance forms do provide sinkhole coverage.  As always, be sure to discuss this coverage and other potential coverage limitations with your agent on your specific policy.