Do I need Sinkhole Coverage?
To understand sinkhole coverage you must first understand Catastrophic Ground Cover Collapse coverage. While insurance companies in Florida aren’t required to cover for sinkhole losses, the good folks in Tallahassee do require insurance companies to insure Ground Cover Collapse.
What’s the difference you’re asking?
Four things must happen for the Ground Cover Collapse coverage to kick in. First, there must be an abrupt collapse of the ground cover. Second, there must be a depression in the ground that’s visible to the naked eye. Third, there must be structural damage to the building and foundation. And fourth, the structure must be condemned and ordered to be vacated by a governmental agency.
If these four things happen, then a standard homeowners insurance policy should provide coverage. If all four of these things do not happen, but the losses are the result of sinkhole activity – then that’s when you need sinkhole coverage.
Now here’s the unfortunate part….
Depending on where you live in Florida, a sinkhole inspection may be required before the insurance company agrees to offer sinkhole coverage – and this could cost you a couple hundred dollars out of pocket. The other unfortunate part is the deductible, many insurance companies require a 10% deductible for sinkhole losses. If you have a $250,000 home, you’re looking at sinkhole deductible of $25,000. Catastrophic Ground Cover Collapse, however, will typically fall under your standard deductible – which is commonly around $1000.
After hearing all of this, if you decide that you want sinkhole coverage, take a look at your policy to see if you already have it or call your agent. Don’t just assume you have sinkhole coverage because you live in Florida.
Want to know if there are sinkholes reported near your home? Check out the Essential Florida Sinkhole Guide.
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