The answer to that question would probably be a definite “yes” if you live in Florida—the sinkhole capital of the United States—and “maybe” if you live in Texas, Pennsylvania, Alabama, Missouri, Kentucky or Tennessee. Sinkholes are especially common in these six states. Sinkholes” are depressions in the surface of the ground caused by an accumulation of water which dissolves porous underground rock such as limestone or carbonate and leaves a void in the underground area that eventually collapses from the weight of the top soil creating a hole.1
While sinkholes can happen anywhere, Florida and the six states named above contain a massive amount of evaporite or carbonate underground rock which overtime allows water to dissolve porous rock such as limestone and carbonate. A void space is left in the ground from the dissolving of the rock which is not visible from the surface until the top layer of soil collapses inward.
Most standard homeowner property insurance policies exclude a sinkhole coverage claim relating it to a “movement of the earth” exclusion. This practice comes from the fact that when homeowner’s insurance policies are priced, the real estate value of the land is excluded. In other words, the property is insured for what it would cost to rebuild or repair the home without considering land costs. Insurers in Florida and Tennessee are required to offer optional sinkhole coverage. Thus, in high-risk sinkhole areas such as Florida, insureds must purchase sinkhole coverage separately either by way of an endorsement or as a stand-alone policy.
Florida property insurers are also required to insure “Catastrophic Ground Collapse” as part of the standard Florida homeowner’s insurance package.2 This coverage is for those severe cases where damage to the home makes it uninhabitable. Even though it would seem these two provisions—sinkhole insurance and Catastrophic Ground Collapse insurance—would be the same thing, they are not. To prevail on coverage under Catastrophic Ground Collapse, an insured must meet the following four criteria:
•The abrupt collapse of the ground cover.
•A depression in the ground cover clearly visible to the naked eye.
•Structural damage to the covered building, including the foundation.
•The insured structure being condemned and ordered to be vacated by the governmental agency authorized by law to issue such an order for that particular structure.3
Failure to meet the above four criteria, leaves an insured stranded with no coverage and sinking financially with the possibility of facing a huge repair bill. Sinkhole insurance, on the other hand, does not require satisfaction of the above four standards before coverage applies for a loss. Thus, it is easier for policyholders to file a claim if their home is damaged by a sinkhole than to file a claim and seek coverage based on Catastrophic Ground Collapse. A drawback to choosing one type of coverage over the other is the fact that sinkhole insurance generally cost more than Catastrophic Ground Collapse coverage depending, of course, on where you live, and the risk associated with sinkholes.
As the saying goes, “everything is bigger in Texas” and that includes the largest sinkhole on record located right here in the Lonestar State in Daisetta, Texas, just northeast of Houston in Liberty County. In May 2008, the “Daisetta Sinkhole” formed when an underground mound of rock salt collapsed. It swallowed several vehicles, oil drilling equipment and oil tanks.4 In one day, the Daisetta Sinkhole” grew to 656 feet in diameter and 246 feet deep. Within a couple of weeks, a seven foot lake had formed in the sinkhole and a seven foot alligator had taken up residence in the lake. Presently, the Daisetta Sinkhole covers approximately six acres with a depth estimate of 250 feet.
1 See U.S. Geological Survey at https://www.usgs.gov/faqs/what-a-sinkhole?qt-news_science_products.
2 Id. at 2.
4 See https://www.usgs.gov/media/images/sinkhole-daisetta-texas