Sinkholes: Know your risk and coverage

Poor urban planning, shifting environmental conditions and bad luck can all make sinkholes a headache for homeowners. When vulnerabilities beneath the earth cause roads, foundations and other elements to sink into a pit, the fallout for property owners can be costly and devastating. The U.S. Geological Survey reports that about 20 percent of the United States is built above ground that is susceptible to slippage and collapse, which makes it essential for residents to understand their risk and coverage in the event of a catastrophe. 

For some homeowners, standard real estate insurance policies have not been enough. As accidents in "Sinkhole Alley," Florida caused destruction over the last fifteen years, revisions to legislation and media attention took the focus off the burden on residents. Engineers and appraisers are able to size up the potential of a lot to experience a sinkhole, but for homeowners already living on vulnerable ground, it can be too late. That's why it's imperative for homeowners to understand the language of their policies. 

Since some government reimbursement for damages sustained due to a sinkhole is possible, some insurance companies hold claims until after any governmental payout has occurred, a process that can be protracted and insufficient. In some areas, local governments have suspended payment to homeowners on the grounds that the dissolution of underground material was not linked to a public utility system, which can cause sinkholes.

"[New Florida legislation] has made it far more difficult for homeowners to qualify for a claim," said Jeff Harrington and Dan DeWitt of the Tampa Bay Times. "And by leaving homeowners stuck with sinkhole homes they cannot repair, it has created a potential new drag on property values."

For that reason, add-on sinkhole policies exist for homeowners who believe they need additional protection.