Sinkhole coverage and catastrophic ground cover collapse in Florida

Two different coverages

Section 627.706 of the Florida Statutes requires every property insurer in Florida to cover catastrophic ground cover collapse. Broader sinkhole loss coverage, by contrast, is optional: insurers must make it available for an additional premium, may inspect before issuing it, and may apply a sinkhole deductible of 1, 2, 5 or 10 percent of the dwelling limit.

What counts as catastrophic ground cover collapse

The law requires all four of these:

• An abrupt collapse of the ground cover
• A depression in the ground clearly visible to the naked eye
• Structural damage to the covered building, including the foundation
• The structure being condemned and ordered vacated by the authorized government agency

Settling or cracking of a foundation, structure or building alone does not qualify.

Sinkhole loss coverage

If you bought sinkhole coverage, it applies to structural damage to the covered building, including the foundation, caused by sinkhole activity, as the statute defines those terms. Contents coverage and additional living expenses apply only if there is structural damage caused by sinkhole activity.

How insurers investigate

Under section 627.707, the insurer must inspect the property. If it confirms structural damage but cannot identify a valid cause, or the damage is consistent with a sinkhole loss, and sinkhole loss is covered, it must engage a professional engineer or professional geologist to test and report on the cause, generally at the insurer’s expense. After the first inspection it must tell you in writing what it has determined so far. Disputes over covered sinkhole claims can go to neutral evaluation.

Watch the 2-year deadline

Any sinkhole claim, including supplemental and reopened claims, is barred unless notice is given within 2 years after you knew or reasonably should have known about the sinkhole loss. If you see new cracks, doors that stick or floors that slope, photograph them with dates and check your declarations page for sinkhole coverage.