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

Four states—Illinois, Indiana, Kentucky, and West Virginia—offer coverage for loss caused by mine subsidence through use of special endorsements to standard ISO homeowners forms. Indiana, Kentucky, and West Virginia specifically limit coverage to damage arising out of coal mine subsidence. Illinois includes coverage for loss or damage caused by subsidence of coal, clay, limestone, or fluorspar mines, but makes the point that this list is not inclusive.

Some states offer coverage for loss resulting from mine subsidence directly through the state itself, such as Pennsylvania 's Coal and Clay Mine Subsidence Insurance Fund. The web site for Pennsylvania is: http://www.dep.state.pa.us/dep/deputate/minres/bmr/msipage/HomeOwners.html. Pennsylvania offers coverage for both residential and nonresidential risks up to $250,000. Ohio offers coverage up to $50,000 for homes in eligible counties through the Ohio Mine Subsidence Insurance Underwriting Association. See http://www.dnr.state.oh.us/publications/geo/insurance.html. Colorado provides protection through a fund only for residences built prior to February 22, 1989 which have been identified as being in a subsidence prone area. This is technically not an insurance program. The homeowner must pay for an inspection to enroll, and then pay an annual fee for four years. After that, no fee is required from the original participant. See http://www.mining.state.co.us/dmginactive.html and click on Mine Subsidence Protection Program for information.

Coverage for loss caused by sinkhole collapse may be purchased where allowed. One state, Florida , has mandated (Fla. Stat. 627.706, 1981) that homeowners forms include coverage for loss caused by sinkhole collapse, but no other states have mandated this coverage.

The ISO endorsements for mine subsidence coverage are: Indiana, HO 23 83 09 01; Kentucky, HO 23 84 01 01 and HO 23 87 01 01; Illinois, HO 23 88 04 01 and HO 23 98 04 01 and West Virginia, HO 23 31 08 95. The sinkhole collapse coverage endorsement is HO 04 99 10 00, but Oregon uses endorsement HO 04 99 02 00. In the following discussion, we will review some judicial thinking on the issues surrounding sinkhole collapse and mine subsidence, and then examine the coverages provided by the current editions of the ISO endorsements.

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

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

See, for example, Burnett et al. v. Cincinnati Ins. Co., 690 N.E.2d 747 (Ind. App. Ct. 1998). The insureds had a homeowners policy endorsed with mine subsidence coverage. Their home sustained such severe damage that $75,000—the maximum amount of coverage available— was reached. The insureds argued that the entire loss should be covered, and they should receive additional coverage under other provisions of the policy, such as for personal property. The court said that the insurer's failure to explicitly exclude coverage for personal property or loss of use in the mine subsidence endorsement did not mean the insureds by default gained coverage. Rather, the court found for the insurer, stating that the insureds had presented no evidence or argument that personal property and additional living expense should be covered.

The definition of mine subsidence differs among the states offering the coverage. In Illinois, mine subsidence means “lateral or vertical ground movement caused by a failure initiated at the mine level of man-made underground mines, including but not limited to coal mines, clay mines, limestone mines and fluorspar mines, that directly damages residences, including unscheduled other structures or scheduled other structures.” Unlike mineral-rich Illinois, Indiana, Kentucky, and West Virginia limit the coverage to subsidence of coal mines. In Indiana's endorsement, mine subsidence means “the collapse of inactive underground coal mines, abandoned before August 3, 1977, resulting in damage to a 'structure' located in Indiana and covered under this policy.” Mine subsidence in Kentucky means “the collapse of underground coal mines resulting in direct damage to a 'structure'.” The West Virginia endorsement is similar to the Illinois endorsement in that the loss must be caused by “lateral or vertical movement, including collapse which results therefrom.” The definition of structure will be discussed in the appropriate state discussions.

What mine subsidence is not is equally clear in these endorsements. The Illinois endorsement specifies that mine subsidence 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 of storm or sewer drains or rapid transit tunnels. Both Kentucky's and Indiana 's endorsements exclude loss caused by earthquake or earth movement, landslide or volcanic eruption; or collapse of storm or sewer drains. Additionally, Kentucky excludes loss caused by water seepage.

Although the amount of coverage purchased may vary, ultimately the limit of liability for all the mine subsidence forms is governed by amounts available in the state mine subsidence funds to reimburse the insurer. For example, in Illinois , coverage may be purchased for an aggregate amount in any one occurrence of not more than the coverage A dwelling limit of liability or $350,000, whichever is less. However, the loss settlement provision states that the limit of liability in any one mine subsidence occurrence will not be more than the amount available in the Illinois Mine Subsidence Residential Insurance Sub-fund to reimburse the insurer.

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

The endorsement used in Indiana to provide coverage is HO 23 83 09 01 mine subsidence coverage— Indiana . The insured may request this coverage prior to policy issuance or renewal. The insurer need not offer the coverage unless so requested. The dwelling to be insured must be located in an eligible county (consult state exception rules), and not unrepaired following an earlier mine subsidence incident.

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

A covered loss is settled at the smallest of: $200,000 for each structure; the limit of liability applicable under the endorsement; the actual cash value at the time of the loss; or the amount available in the Mine Subsidence Insurance Fund available to reimburse the insurer. There is a deductible of 2 percent of the limit of liability applying to a covered structure, but in no case less than $250 or more than $500. No other deductible in the policy applies to a loss covered by this endorsement. 

Illinois endorsement HO 23 88 04 01 mine subsidence—residence and other structures— Illinois is designed to cover the residence at the location described in the declarations. A residence can include a one to four family dwelling, and unscheduled driveways, sidewalks, basements, footings foundations, septic systems and underground pipes directly servicing the dwelling. Not included within the definition are “living units.” These are insured on HO 23 98 04 01, discussed later. If the permitted incidental occupancies endorsement HO 04 42 10 00 is attached to the policy, the definition also includes any building or structure on the residence premises from which the permitted business is conducted. This endorsement specifically states that personal property, land, lawns, plants, shrubs, trees, crops, parking lots and agricultural field drainage tile are not covered.

Loss settlement is limited to not more than the coverage A amount or $350,000, whichever is less. This is an aggregate amount for any one occurrence. The insured can schedule structures other than the residence building, in which case the scheduled amount applies to that structure only. The insurer's limit of liability will not be more than the amount available in the Illinois Mine Subsidence Residential Sub-fund to reimburse a paid loss.

Endorsement HO 23 98 04 01 mine subsidence—living units only— Illinois is designed to cover living units such as condominium or cooperative apartment units. “Living units” are defined as “that physical portion designated for separate ownership or occupancy for residential purposes, of a building or group of buildings, permanently affixed to realty in Illinois , having elements which are owned or used in common, including a condominium unit, a cooperative unit or any other similar unit.” The endorsement covers direct physical loss to improvements, alterations or additions, and reimbursement of losses under coverage D loss of use. (Loss of use coverage is not mentioned in any of the other forms.) The form also covers loss assessment within the total limit of insurance.

Loss settlement is limited to the least of: the total amount of insurance provided in the policy for additions and alterations and reimbursement for loss of use, $15,000, or the amount available in the Illinois Mine Subsidence Residential Insurance Sub-fund to reimburse the insurer.

Coverage for coal mine subsidence must be offered on all real property in all qualified locations. (For a list of qualified locations, consult the state exception rules.) When all structures insured under a given homeowners form are to be covered for loss resulting from coal mine subsidence, endorsement HO 23 84 01 01 mine subsidence coverage endorsement— Kentucky is to be used. The limit of liability applying to the dwelling is scheduled, and 10 percent of that amount may be applied to cover loss to other structures covered under coverage B. The maximum amount reinsured by the Kentucky Coal Mine subsidence Fund is $100,000, in accordance with loss settlement provisions that state that no more than the least of: $100,000; the limit of liability shown in the schedule; or the amount available in the Mine Subsidence Insurance Fund to reimburse the insurer will be paid. In the Kentucky endorsement, a structure means “a dwelling, building or fixture permanently affixed to realty.” Payment for debris removal is included in the limit shown on the schedule.

When only specific structures are to be covered, the endorsement HO 23 87 01 01 is used. This endorsement requires scheduling the structure(s), with an applicable limit of insurance.

Each endorsement contains a special deductible of 2 percent of the limit of liability shown in the endorsement's schedule, but no less than $250 nor more than $500.  

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

In West Virginia , coverage for loss caused by coal mine subsidence must be provided unless waived by the insured, except for fifteen counties where coverage must be provided only upon the insured's request. Coverage applies to any “structure,” defined as “any dwelling building, or fixture permanently affixed to realty located in West Virginia , including the costs of excavations, grading or filling, basements, footings, foundations, septic systems, and underground pipes directly servicing the 'structure'.” There is no coverage for driveways, sidewalks, parking lots, land, trees, plants, crops, or agricultural drainage tile. Although the insured can apply up to 10 percent of the amount of insurance applicable to covered dwellings to other buildings on the property (such as a detached garage), there is no coverage for any structure used in whole or in part for any business purpose. (Coverage is available under endorsement WVMS-2.) The limit of liability is the smallest of: the limit shown in the declarations for coal mine subsidence; the replacement cost of the structure or any part thereof for identical use on the same premises; the amount actually and necessarily spent to repair or replace the structure; the amount of fire insurance on the structure; or the amount available in the West Virginia Mine Subsidence Insurance Fund to reimburse the company. A deductible of $250 applies to each loss.

The endorsement states that the provisions of the West Virginia valued policy law do not apply to this coverage. If the endorsement is attached to a new policy, coverage is not effective until thirty days after the application date. All provisions in the policy apply, except for the additional coverages and additional living expense coverage.

As noted above, coverage for loss resulting from sinkhole collapse is available under endorsement HO 04 99 10 00 sinkhole collapse where permitted. (In Oregon , the endorsement is HO 04 99 02 00.) This endorsement may be attached to all homeowners forms except the HO 00 04 10 00 and HO 00 06 10 00. Attaching the sinkhole collapse endorsement to a homeowners policy amends the earth movement exclusion so that it does not apply to sinkhole collapse. Florida 's special provisions HO 01 09 05 03 adds the peril of sinkhole collapse as a covered cause of loss.

Sinkhole collapse is defined as actual physical damage arising out of or caused by sudden settlement or collapse of the earth supporting the covered property. The settlement or collapse must result from subterranean voids created by the action of water on limestone or similar rock formations. The earth movement exclusion, as noted, does not apply to this peril.

In two instances courts have upheld this definition as being clear and unambiguous. In the case of Dupps v. The Travelers Insurance Company, 80 F.3d 312 (8th Dist. 1996), the insureds' Arkansas home was situated in front of a thirty-foot high bluff. Near the top of the bluff was a cave. The roof of the cave partially collapsed, sending boulders onto the insureds' property and damaging their home. Although the insureds' homeowners policy included coverage for sinkhole collapse, the appellate court did not agree with the Dupps' contention that the cave roof's collapse must have been a consequence of sinkhole collapse. Indeed, stated the court, the policy clearly excluded loss caused directly or indirectly by earth movement (other than sinkhole collapse), such as landslide. The judge quoted the Random House Dictionary, 2d Edition for the meaning of landslide: “the downward falling or sliding of a mass of soil, detritus, or rock on or from a steep slope” and found there was no coverage.

In the case of Cincinnati Insurance Company v. Wiltshire, 472 So. 2d 1276 (Fla. App. Ct. 1985) the court found for the insurer. Cone-shaped holes developed under the paved parking area adjacent to the insureds' home, and portions of the area finally collapsed into the holes. Although the insureds' homeowners policy included sinkhole collapse coverage, expert witnesses for both the appellant and appellee testified that the cause of the cone-shaped holes was sand displacement, and thus the holes were not sinkholes in the geological sense. Sinkholes are formed by the carbon dioxide in water dissolving calcium carbonate in limestone; the limestone is dissolved and land above it collapses. The holes on the Wiltshire property did not meet this description, and therefore coverage was precluded.

One case addressed the meaning of sudden contained in the definition. In Zimmer v. Aena Insurance Company, 383 So. 2d 992 (Fla. App. Ct. 1980), the court found that the purpose of the legislation was carried out through use of this word, extending coverage both to those sinkholes instantaneously appearing, and those gradually appearing. The court looked to the definition of sudden in Black's Law Dictionary (5th Edition): “happening without previous notice or with very brief notice; coming or occurring unexpectedly; unforeseen; unprepared for.”

Unlike the mine subsidence endorsements, coverage is provided up to the policy's limit of liability. As the judge in the Zimmer case noted, perhaps facetiously, “sinkhole losses did not prove to be burdensome to the insurance industry. An order of the Insurance Commissioner dated April 26, 1973, recited that during the first three years of the plan for equitable apportionment of losses between insurers, there had not been a single loss. The order concluded that the administrative costs of the plan were disproportionately excessive in relation to losses incurred or anticipated.”

It is interesting to note that the ISO commercial property broad form and special form causes of loss CP 10 20 04 02 and CP 10 30 04 02 include coverage for direct physical loss to property resulting from sinkhole collapse. In the case of York Insurance Co. v. Williams Seafood, 544 S.E.2d 156 ( Ga. 2001) the insured's restaurant collapsed into a sinkhole caused by a flood. Flood is an excluded peril on the commercial property forms, as it is on the homeowners forms. However, because of the placement of the covered peril of sinkhole collapse in the form, as an additional coverage (section D) with its own set of exclusions, the court held that the exclusions that applied to section B were not applicable. Therefore, the sinkhole coverage was not limited by the exclusion for damage by flood.