The Insurance Services Office (ISO) 1991 homeowners formsexcluded coverage for “earth movement, meaning…mine subsidence;earth sinking, rising or shifting.” Therefore, loss caused by theseoccurrences was excluded unless coverage was specifically endorsedonto the policy. But with the Homeowners 2000 program, theexclusion was changed to exclude loss resulting from “b. Landslide,mudslide or mudflow; c. Subsidence or sinkhole. The ISO 2011homeowners forms contain the same exclusion. In order to make thepoint that subsidence encompasses subsidence resulting from amine's cave-in, the mandatory special provisions for many statesamend the definition of earth movement. See, for example,HO 01 01 09 00 Special Provisions – Alabama, which states thatearth movement means “earthquake, including land shockwaves or tremors before, during or after a volcanic eruption;landslide; mine subsidence; mudflow; earth sinking, rising orshifting.”

Four states—Illinois, Indiana, Kentucky, and West Virginia—offercoverage for loss caused by mine subsidence through use of specialendorsements to standard ISO homeowners forms. Indiana, Kentucky,and West Virginia specifically limit coverage to damage arising outof coal mine subsidence. Illinois includes coverage for loss ordamage caused by subsidence of coal, clay, limestone, or fluorsparmines, but adds that this list is not inclusive.

Some states offer coverage for loss resulting from minesubsidence directly through the state itself, such asPennsylvania's Coal and Clay Mine Subsidence Insurance Fund, whoseWeb site is www.pamsi.org.Pennsylvania offers coverage for both residential andnonresidential risks up to $500,000.

Ohio offers coverage up to the homeowners limit or $300,000,whichever is greater, for homes in thirty-seven eligible countiesthrough the Ohio Mine Subsidence Insurance Underwriting Association(administered by the Ohio Fair Plan). See www.ohiominesubsidence.com.

Colorado provides protection through a fund only for residencesbuilt prior to February 22, 1989, which have been identified asbeing in a subsidence prone area. This is technically not aninsurance program. The homeowner must pay for an inspection toenroll and pay an annual fee for four years. After that, no fee isrequired from the original participant. See www.mining.state.co.us.

Coverage for loss caused by sinkhole collapse may be purchasedwhere allowed. Florida has mandated (Fla. Stat. §627.706) thathomeowners forms include coverage for loss caused by sinkholecollapse (discussed later in this article). Some other states mustoffer it. For example, Tennessee law states, “Every insureroffering homeowner property insurance in this state shall makeavailable coverage for insurable sinkhole losses on any dwelling,including contents of personal property contained in the dwelling,to the extent provided in the policy to which the sinkhole coverageattaches.” (TCA §56-7-130)

The AAIS homeowners HO 0003 01 06 covers sinkhole collapsedamage to personal property.

Mine Subsidence Overview

Exactly what is, and is not, covered is sometimes a matter ofdiscussion. In the states that offer mine subsidence coverage byendorsement, mine subsidence is defined in the form. And,although dealing with the same sort of occurrence—the ground onwhich a residence (or other structure) stands giving way—the methodof settling these losses varies.

All of the endorsements provide coverage for direct physicalloss to structures caused by mine subsidence. This does not includeother loss arising out of the loss to the dwelling, such as forpersonal property, additional living expense, or loss in value.Unlike the endorsement for sinkhole collapse, which amends theexcluded peril of earth movement, adding coverage for minesubsidence does not. These endorsements simply offer a means torecover for loss to the dwelling (or a related structure)itself.

In Burnett. v. Cincinnati Ins. Co., 690 N.E.2d 747(Ind. App. Ct. 1998), the insureds had a homeowners policy endorsedwith mine subsidence coverage. Their home sustained such severedamage that $75,000—the maximum amount of coverage available— wasreached. The insureds argued that the entire loss should becovered, and they should receive additional coverage under otherprovisions of the policy, such as for personal property. The courtsaid that the insurer's failure to explicitly exclude coverage forpersonal property or loss of use in the mine subsidence endorsementdid not mean the insureds by default gained coverage. Rather, thecourt found for the insurer, stating that the insureds hadpresented no evidence or argument that personal property andadditional living expense should be covered.

The definition of mine subsidence differs among thestates offering the coverage. In Illinois, mine subsidencemeans “lateral or vertical ground movement caused by a failureinitiated at the mine level of man-made underground mines,including but not limited to coal mines, clay mines, limestonemines and fluorspar mines, that directly damages residences,including unscheduled other structures or scheduled otherstructures.” Unlike mineral-rich Illinois, Indiana, Kentucky, andWest Virginia limit the coverage to subsidence of coal mines. InIndiana's endorsement, mine subsidence means “the collapse ofinactive underground coal mines, abandoned before August 3, 1977,resulting in damage to a 'structure'.” Mine subsidence in Kentuckymeans “the collapse of underground coal mines resulting in directdamage to a 'structure'.” The West Virginia endorsement is similarto the Illinois endorsement in that the loss must be caused by“lateral or vertical movement, including collapse which resultstherefrom.” The definition of structure will be discussedin the appropriate state discussions.

What mine subsidence is not is equally clear in theseendorsements. The Illinois endorsement specifies that minesubsidence is not lateral or vertical ground movement caused by (a)earthquake, landslide, volcanic eruption; or (b) soil conditions,soil erosion, soil freezing or thawing, improperly compacted soil,construction defects, roots of trees or shrubs; or (c) collapse ofstorm or sewer drains or rapid transit tunnels. Both Kentucky's andIndiana's endorsements exclude loss caused by earthquake or earthmovement, landslide or volcanic eruption; or collapse of storm orsewer drains. Additionally, Kentucky excludes loss caused by waterseepage.

Although the amount of coverage purchased may vary, ultimatelythe limit of liability for all the mine subsidence forms isgoverned by amounts available in the state mine subsidence funds toreimburse the insurer. For example, in Illinois, coverage may bepurchased for an aggregate amount in any one occurrence of not morethan the coverage A dwelling limit of liability or $750,000($350,000 for commercial property), whichever is less. However, theloss settlement provision states that the limit of liability in anyone mine subsidence occurrence will not be more than the amountavailable in the Illinois Mine Subsidence Residential InsuranceSub-fund to reimburse the insurer.

One of the most interesting aspects of this coverage is thetreatment of land following a loss. Kentucky's and Indiana'sendorsements emphasize that the endorsement does not provideinsurance for the cost of filling land. Possibly this treatmentarose from the realization that coal mines, with series upon seriesof tunnels, can extend deep into the ground, and that the cost offilling would be prohibitive.

Indiana Endorsement, [IDL:HO 23 83 09 01.pdf^HO 23 83 09 01^HO23 83 09 01]

The endorsement used in Indiana to provide coverage is HO 23 83,Mine Subsidence Coverage – Indiana. The insured may request thiscoverage prior to policy issuance or renewal. The insurer need notoffer the coverage unless so requested. The dwelling to be insuredmust be located in an eligible county (consult state exceptionrules) and not unrepaired following an earlier mine subsidenceincident.

The endorsement provides coverage for structures but not forland, crops, or other plants. A structure is defined as a“dwelling, building or fixture permanently affixed to realproperty.” Dwellings, fixtures, or buildings owned by a public orgovernment entity cannot be covered by this endorsement.

A covered loss is settled at the smallest of $200,000 for eachstructure; the limit of liability applicable under the endorsement;the actual cash value at the time of the loss; or the amountavailable in the Mine Subsidence Insurance Fund available toreimburse the insurer. There is a deductible of 2 percent of thelimit of liability applying to a covered structure, but in no caseless than $250 or more than $500. No other deductible in the policyapplies to a loss covered by the endorsement.

The earth movement exclusion does not apply to loss caused bymine subsidence.

The AAIS endorsement for mine subsidence in Indiana is CL 033201 01. It is similar to the ISO endorsement, but specificallystates that the insurer will pay the cost to remove the debris ofstructures following loss caused by mine subsidence.

Illinois Endorsements, [IDL:HO 23 88 06 12.pdf^HO 23 88 06 12^HO23 88 06 12] and [IDL:HO 23 98 06 12.pdf^HO 23 98 06 12^HO 23 98 0612]

Illinois endorsement HO 23 88, Mine Subsidence Residence andOther Structures – Illinois, is designed to cover the residence atthe location described in the declarations. A residencecan include a one to four family dwelling, and unscheduleddriveways, sidewalks, basements, footings, foundations, septicsystems, and underground pipes directly servicing the dwelling.Living units are not included within the definition. These areinsured on HO 23 98, discussed later. If the Permitted IncidentalOccupancies – Residence Premises endorsement, [IDL:HO 04 42 1000.pdf^HO 04 42 10 00^HO 04 42 10 00], is attached to the policy,the definition also includes any building or structure on theresidence premises from which the permitted business is conducted.This endorsement specifically states that personal property, land,lawns, plants, shrubs, trees, crops, parking lots, and agriculturalfield drainage tiles are not covered.

Loss settlement is limited to no more than the coverage Aamount, $750,000, or the amount of insurance available in theIllinois Mine Subsidence Residential Insurance Sub-fund, whicheveris least. This is an aggregate amount for any one occurrence. Theinsured can schedule structures other than the residence building,in which case the scheduled amount applies to that structureonly.

Endorsement HO 23 98, Mine Subsidence – Living Units Only –Illinois, is designed to cover living units such as condominium orcooperative apartment units. Living units are defined as“that physical portion designated for separate ownership oroccupancy for residential purposes, of a building or group ofbuildings, permanently affixed to realty in Illinois, havingelements which are owned or used in common, including a condominiumunit, a cooperative unit or any other similar unit.” Theendorsement covers direct physical loss to improvements,alterations, or additions, and reimbursement of additional livingexpenses reasonably and necessarily incurred by the insured. Theform also covers loss assessment within the total limit ofinsurance.

Loss settlement is limited to the least of the total amount ofinsurance provided in the policy for additions and alterations andreimbursement for additional living expenses, $15,000, or theamount available in the Illinois Mine Subsidence ResidentialInsurance Sub-fund to reimburse the insurer.

Kentucky Endorsements, [IDL:HO 23 84 12 10.pdf^HO 23 88 12 10^HO23 84 12 10] and [IDL:HO 23 87 12 10.pdf^HO 23 87 12 10^HO 23 87 1210]

Coverage for coal mine subsidence must be offered on all realproperty in all qualified locations. (For a list of qualifiedlocations, consult the state exception rules.) When all structuresinsured under a given homeowners form are to be covered for lossresulting from coal mine subsidence, endorsement HO 23 84, MineSubsidence Coverage Endorsement – Kentucky, is to be used. Thelimit of liability applying to the dwelling is scheduled, and 10percent of that amount may be applied to cover loss to otherstructures covered under coverage B. The maximum amount reinsuredby the Kentucky Coal Mine Subsidence Fund is $300,000, inaccordance with loss settlement provisions that state that no morethan the least of $300,000; the limit of liability shown in theschedule; or the amount available in the Mine Subsidence InsuranceFund to reimburse the insurer will be paid. In the Kentuckyendorsement, a structure means “a dwelling, building orfixture permanently affixed to realty, but does not include land,trees, plants or crops.” Payment for debris removal is included inthe limit shown on the schedule. If a covered loss occurs, up to$25,000 is available for additional living expense.

When specific structures are to be covered, endorsement HO 2387, Mine Subsidence Coverage Endorsement – Kentucky, is used. Thisendorsement requires scheduling the structure(s), with anapplicable limit of insurance. In event of a covered loss, theinsurer pays no more than $300,000 for any structure, the scheduledlimit of liability, or the amount available in the Mine SubsidenceInsurance Fund to reimburse the insurer. Additional living expenseup to $25,000 is also available.

Each endorsement contains a special deductible of 2 percent ofthe limit of liability shown in the endorsement's schedule, but noless than $250 nor more than $500.

As is the case with the other endorsements, neither of theseprovides coverage for land, trees, plants, or crops.

West Virginia Endorsements, [IDL:HO 23 31 12 08.pdf^HO 23 31 1208^HO 23 31 12 08] and [IDL: HO 23 32 12 08.pdf^HO 23 32 1208^HO 23 32 12 08]

In West Virginia, coverage for loss caused by coal minesubsidence must be provided unless waived by the insured except infifteen counties where coverage must be provided only upon theinsured's request. Coverage may be purchased for dwellingstructures, in which case endorsement HO 32 31, Coal MineSubsidence Coverage Part – West Virginia (Dwelling Structures), isto be used, or for non-dwelling structures, in which caseendorsement HO 23 32, Coal Mine Subsidence Coverage Part – WestVirginia (Non-Dwelling Structures), is used.

Endorsement HO 23 31 defines structure as “any insureddwelling building, or fixture permanently affixed to realty in WestVirginia, including cost of excavations, grading, or filling;basements, footings, foundations, septic systems; and undergroundpipes directly servicing the structure.” Driveways, sidewalks,parking lots, land, trees, plants, crops, or agricultural fielddrainage tile are not covered. Up to 10 percent of the minesubsidence insurance applicable to the dwelling may be applied tobuildings on the premises used exclusively for private purposes. Amaximum of $75,000 is available. A deductible of $250 applies. TheWest Virginia valued policy law does not apply to thisinsurance.

Endorsement HO 23 32 provides coverage for direct loss to anon-dwelling structure caused by coal mine subsidence. Astructure is any insured building or fixture permanentlyaffixed to realty located in West Virginia. Similarly to HO 23 31,the coverage applies to the cost of excavations, grading orfilling; basements, footings, foundations, septic systems; andunderground pipes directly servicing the structure. Property notcovered is the same as that in HO 23 31. The maximum amountavailable is $75,000. A $250 deductible applies.

Sinkhole Collapse

The Sinkhole Collapse endorsement is [IDL:HO 04 99 10 00.pdf^HO04 99 10 00^HO 04 99 10 00], but Oregon uses endorsement [IDL:HO 0499 02 00.pdf^HO 04 99 02 00^HO 04 99 02 00]. The followingdiscussion examines the coverages provided by the current editionsof the ISO endorsements and reviews some judicial thinking on theissues surrounding sinkhole collapse.

Florida Coverage

As previously noted, coverage for loss resulting from sinkholecollapse is available under endorsement HO 04 99, where permitted.This endorsement may be attached to all homeowners forms except[IDL:HO 00 04 05 11.pdf^HO 00 04 05 11^HO 00 04 05 11] and [IDL:HO00 06 05 11.pdf^HO 00 06 05 11^HO 00 06 05 11]. Attaching theSinkhole Collapse endorsement to a homeowners policy amends theearth movement exclusion so that it does not apply to sinkholecollapse.

The Special Provisions – Florida endorsement, [IDL:HO 01 09 1012.pdf^HO 01 09 10 12^HO 01 09 10 12], adds the peril of sinkholecollapse as a covered cause of loss for personal property. Sinkholecollapse is called “catastrophic ground cover collapse” in theendorsement and means “geological activity that results in all ofthe following: the abrupt collapse of the ground cover; adepression in the ground cover clearly visible to the naked eye;structural damage of the principal building structure insured underthe policy, including the foundation; and the principal buildingbeing condemned and ordered to be vacated by the governmentalagency authorized by law to issue such an order for that buildingor structure.” So, suspicions of a possible sinkhole will nottrigger coverage; the dwelling must actually sustain damage asoutlined for coverage to apply.

On the Sinkhole Loss Coverage – Florida endorsement, [IDL:HO 2394 10 12.pdf^HO 23 94 10 12^HO 23 94 10 12], sinkhole lossmeans structural damage to the principal building or foundationarising out of or caused by sinkhole activity. In turn,sinkhole activity means “settlement or systematicweakening of the earth supporting the covered building. Thesettlement or systematic weakening must result from contemporaneousmovement or raveling of soils, sediments or rock material intosubterranean voids created by the effect of water on limestone orsimilar rock formations.”

In addition to coverage for buildings insured under coverage Aor B, the insurer will pay the costs incurred to stabilize the landand building and repair the foundation in accordance with therecommendations of a professional engineer who has verified thepresence of the sinkhole loss in compliance with Florida sinkholetesting standards. The loss settlement provisions state that theinsurer will pay no more than the actual cash value of the damagedproperty until the insured enters into a contract for theperformance of building stabilization or foundation repairs. Oncethe contract has been entered into, the insurer will pay the amountnecessary to begin and perform the repairs as work progresses andas expenses are incurred. If repairs have begun and a professionalengineer (who must have been selected or approved by the insurer)determines that the cost of repairs exceeds policy limits, theinsurer must either complete the repairs or pay the limits withouta reduction for the repair expenses already incurred. Theendorsement replaces the appraisal provision with respect to thiscoverage by a neutral evaluation provision.

Sinkhole Collapse: Court Findings

In two instances courts have upheld the definition ofsinkhole collapse (settlement or collapse resulting fromsubterranean voids created by the action of water on limestone orsimilar rock formations) as being clear and unambiguous. InDupps v. Travelers Ins. Co., 80 F.3d 312 (8^thCir. 1996), the insureds' Arkansas home was situated in front of athirty-foot high bluff. Near the top of the bluff was a cave. Theroof of the cave partially collapsed, sending boulders onto theinsureds' property and damaging their home. Although the insureds'homeowners policy included coverage for sinkhole collapse, theappellate court did not agree with the Dupps' contention that thecave roof's collapse must have been a consequence of sinkholecollapse. Indeed, stated the court, the policy clearly excludedloss caused directly or indirectly by earth movement (other thansinkhole collapse), such as landslide. The judge quoted theRandom House Dictionary, 2^nd Edition for themeaning of landslide: “the downward falling or sliding ofa mass of soil, detritus, or rock on or from a steep slope” andfound there was no coverage.

In Cincinnati Ins. Co. v. Wiltshire, 472 So. 2d 1276(Fla. App. Ct. 1985), the court found for the insurer. Cone-shapedholes developed under the paved parking area adjacent to theinsureds' home, and portions of the area finally collapsed into theholes. Although the insureds' homeowners policy included sinkholecollapse coverage, expert witnesses for both the appellant andappellee testified that the cause of the cone-shaped holes was sanddisplacement, and thus the holes were not sinkholes in thegeological sense. Sinkholes are formed by the carbon dioxide inwater dissolving calcium carbonate in limestone; the limestone isdissolved and land above it collapses. The holes on the Wiltshireproperty did not meet this description, and therefore coverage wasprecluded.

But a more recent case, Betz v. Erie Ins. Exchange, 957A.2d 1244 (Pa. Super 2008) determined that the definition wasambiguous. The insureds had purchased sinkhole collapse coverage,which contained the common definition. The court noted that theendorsement mentioned limestone or similar rock formations, but didnot describe in what manner rock formations other than limestonehad to be similar to limestone. Additionally, the endorsement didnot name any type of rock other than limestone, and an insuredcould not be expected to investigate the geology underlying hisproperty and educate himself on the mechanics of sinkholes whendeciding whether to purchase the endorsement. The court thereforefound for the insured.

One case addressed the meaning of sudden contained inthe definition. In Zimmer v. Aetna Ins. Co., 383So. 2d 992 (Fla. App. Ct. 1980), the court found that the purposeof the legislation was carried out through use of the wordsudden, extending coverage both to those sinkholesinstantaneously appearing, and those gradually appearing. The courtlooked to the definition of sudden in Black's LawDictionary (5th Edition): “happening without previous noticeor with very brief notice; coming or occurring unexpectedly;unforeseen; unprepared for.”

Unlike the mine subsidence endorsements, coverage is provided upto the policy's limit of liability. As the judge in theZimmer case noted, perhaps facetiously, “sinkhole lossesdid not prove to be burdensome to the insurance industry. An orderof the Insurance Commissioner dated April 26, 1973, recited thatduring the first three years of the plan for equitableapportionment of losses between insurers, there had not been asingle loss. The order concluded that the administrative costs ofthe plan were disproportionately excessive in relation to lossesincurred or anticipated.”

It is interesting to note that the ISO commercial propertycauses of loss forms [IDL:CP 10 10 10 12.pdf^CP10 10 10 12^CP 10 1010 12], [IDL:CP 10 20 10 12.pdf^CP 10 20 10 12^CP 10 20 10 12], and[IDL:CP 10 30 10 12.pdf^CP 10 30 10 12^CP 10 30 10 12] includecoverage for direct physical loss to property resulting fromsinkhole collapse. (But see the Florida Changes endorsement, CP 01 25; sinkhole loss as defined in Florida law is notprovided by the unendorsed forms.) In York Ins. Co. v. WilliamsSeafood of Albany, Inc., 544 S.E.2d 156 (Ga. 2001) theinsured's restaurant collapsed into a sinkhole caused by a flood.Flood is an excluded peril on the commercial property forms, as itis on the homeowners forms. However, because of the placement ofthe covered peril of sinkhole collapse in the form, as anadditional coverage (section D) with its own set of exclusions, thecourt held that the exclusions and limitations (sections B. and C.)that applied to section A were not applicable. Therefore, thesinkhole coverage was not limited by the exclusion for damage byflood.