When a large sinkhole appeared without warning in the parking lot at the Burlington Mall in Massachusetts earlier this year, it served as a timely reminder that sinkholes can represent a significant hazard to both people and property. In this case, the sinkhole almost swallowed a car. Thankfully catastrophic sinkholes are rare.
A sinkhole can be defined as any sudden depression in the earth caused when surface sediment subsides into an underground cavern. Natural sinkholes are caused by the erosion of soluble rock formations such as limestone, gypsum, or salt. They can form after a period of prolonged heavy rain or flooding, or following a drought which has lowered the local water table. However, sinkholes can also be caused by abandoned septic tanks, the decay of buried organic material (such as trash), collapsed mines, and by large-scale suburban housing construction.
Insuring sinkholes
Most home and commercial insurance policies specifically exclude damage caused by the movement of earth, so as such, sinkhole damage typically isn't covered. However, few people realize that contents, or the "stuff in your home," may actually be covered in sinkhole cases. To cite Chapter 627 of the Florida Statutes: "Contents coverage applies if there is a loss resulting from a catastrophic ground cover collapse."
In some states (such as Florida and Tennessee), regulations require that coverage is offered for damage due to sinkholes. However, extra coverage comes with an additional premium, and in economically uncertain times many may be tempted to take the risk and go without coverage.
There are more sinkholes in Florida than any other state, but local insurers have also recorded a worrying increase in potentially fraudulent claims. Some fraudulent contractors will solicit customers by pointing to any crack as "sinkhole damage" – although these contractors will sound tempting, consumers need to be aware.
The Florida Insurance Council reported that some homeowners filed sinkhole claims because of minor cracking in walls and foundations, only to use settlements to pay other bills instead of repairing the damage. This led to a change in the law to clearly define the type of damage covered by insurance, set a time limit on claims, and require policyholders to pay for tests proving damage was caused by sinkholes. (Costs for testing are refunded if sinkholes are found).
Supporters of this legislation claim that it will prevent premiums from spiralling out of control as damage pay-outs rise, but detractors argue that it places the needs of insurers above the needs of customers.
Insurers in Florida are also required to offer coverage for "catastrophic ground cover collapse," but only if four conditions are met:
- There must be an abrupt collapse.
- The depression in the ground must be clearly visible to the naked eye.
- There must be structural damage, including the foundation of the property.
- The property must be deemed uninhabitable and condemned by a government agency.
Don't fall through the cracks
If you're planning on purchasing property in a high-risk state (such as Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and Pennsylvania), it's worth discussing it with your insurance agent to check that the house is insurable and whether sinkhole coverage is included in the basic policy or available as a rider. Get your insurer to conduct tests to assess the risk of sinkholes (in some areas they require periodic testing as a condition of the policy). Speak to your county property appraiser about sinkholes reported in your area and ask whether there's a sinkhole database.
Your mortgage lender will require a home survey before issuing a loan, so check that the inspection covered signs of sinkholes. It may be prudent to hire a professional home inspector specifically to look for potential sinkholes.
How to spot sinkholes
Once you've moved into your property, be vigilant for tell-tale warning signs like small holes forming in the ground and cracks developing in your property's walls and floors. If you can't properly close your doors and windows, this could indicate that the foundations of your property have shifted and cloudy or muddy well water may mean a sinkhole is developing. Cracks in the earth can develop in a circular pattern surrounding the sinkhole. You may find vegetation in the surrounding area wilts and dies as water is drawn away, or that small ponds develop where rainfall accumulates. It's wise to seek professional assistance if you're concerned.
If you're unlucky enough to discover a developing sinkhole, evacuate the property immediately and contact your insurance agent and the local city or county building inspector. If it's safe enough to do so, mark the position of the sinkhole with tape, rope or fencing, since you could be liable if someone else is injured by the sinkhole on your property. Only stop to move personal belongings if you are sure it is safe to do so.
Sinkholes remain a rare, if potentially catastrophic risk, but with a little preparation and vigilance homeowners can choose the appropriate level of coverage and have peace of mind.
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