When Should I Consider Sinkhole Coverage?

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Sinkhole coverage is recommended if you live in an area with a history of sinkhole activity or a high-risk state like Tennessee or Florida. Your homeowners insurance policy generally won’t cover losses caused by a sinkhole but it’s possible to pay extra for this coverage via an add-on to your policy. Sinkhole insurance can be quite expensive but may be a worthy investment as the losses from a sudden ground collapse are often considerable.

Key Takeaways

  • Homeowner losses due to sinkhole activity can exceed $10,000 on average.
  • Standard homeowners insurance excludes losses caused by sinkhole activity but you can buy coverage via a policy endorsement.
  • On average, sinkhole insurance can cost between $2,000 and $4,000.
  • In Florida and Tennessee, homeowners insurance companies are required by law to offer sinkhole insurance.

What Is Sinkhole Insurance?

Sinkhole insurance is coverage for your home and personal belongings when they suffer losses from a sinkhole. Sinkholes usually form when water seeps into the ground but has no place to drain. Instead, the water pools, steadily eroding at the ground beneath the surface until the surface suddenly collapses.[1]

If your house or a portion of it is caught in the collapse, the losses can be substantial. The cost of repairing your foundation alone can exceed $10,000 on average, which would be paid out of pocket if you did not buy sinkhole insurance.[2]

Sinkhole Loss Coverage

Most standard homeowners insurance policies exclude coverage for sinkhole losses and you will need to buy coverage, usually as an add-on to your existing policy. Insurance carriers often call this a policy endorsement or rider.

It’s important to note that earthquake insurance generally does not cover damages caused by sinkholes. While both are types of earth movements, you will typically need to buy separate types of coverage for each.[3] Similarly, flood insurance does not cover sinkhole-related losses either.[4]

Catastrophic Ground Cover Collapse Coverage

Catastrophic ground cover collapse coverage generally includes coverage for losses caused by sinkholes and the term is typically used in the state of Florida. Insurance companies that sell home insurance policies in Florida are required by law to offer catastrophic ground collapse coverage albeit at an extra cost.[5]

Similarly, carriers in Tennessee are required to offer sinkhole coverage when selling home insurance policies.[6] Fortunately, if you live in Tennessee and are insured through ERIE insurance, sinkhole protection is included with your policy at no additional cost.[7]

How Does Sinkhole Coverage Work?

If you purchased coverage for sinkholes, then your home’s structure and contents, as well as fences, detached garages and other structures will be insured — similar to your base homeowners insurance policy. Your personal belongings are typically insured for 50% to 70% of your dwelling coverage limit.[8]

In addition, you generally will have to pay a deductible before your insurance company pays out. In Florida, the carrier is allowed to set the deductible at 1%, 2%, 5% or 10% of the policy’s dwelling limits. For a policy with $250,000 in dwelling coverage, the deductible can range from $2,500 to $25,000.[5]

Since sinkhole claims often carry high price tags, insurance carriers will conduct their due diligence when deciding to approve or deny the claim.

For example, in Florida, insurance companies will send a professional to check if sinkhole activity caused damages to your home’s structure and will approve the claim if the following conditions are met:[5]

  1. The ground abruptly collapsed.
  2. The depression in the ground is visible to the naked eye.
  3. There is structural damage to the home and foundation.
  4. The government ordered the homeowners to vacate the home.

If a company wants to deny a sinkhole claim because the losses were not caused by a sinkhole, they may be required to follow certain steps. For example, insurance companies in Tennessee must obtain a written certification from a qualified engineer or geologist confirming the damages were not due to sinkhole activity before they can deny the claim. In fact, if the policyholder was found filing a sinkhole claim without merit, they are required to reimburse the insurer for 50% of the assessment costs, up to $2,500.[6]

If your home is located on land abundant with salt beds, limestone, gypsum or some other carbonate rock, then sinkholes can be a serious risk. If you also experience frequent rainfall, then your risk increases because rainwater can dissolve these rocks, steadily forming a sinkhole over time until the surface collapses.[9]

According to the U.S. Geological Survey (USGS), the states that experience the greatest losses from sinkholes are Florida, Texas, Alabama, Missouri, Kentucky, Tennessee and Pennsylvania. If you live in any of these states, then it’s strongly recommended that you consider sinkhole insurance.[10]

US States map with greatest losses caused by sinkhole

Is Sinkhole Coverage Required?

While there is no federal or state law that requires homeowners to buy sinkhole insurance coverage (or homeowners insurance for that matter), it may be required by your lender.

If you’re financing a home in a high-risk state like Tennessee or Florida, maintaining sinkhole insurance may be a condition of getting your mortgage approved.

After you repay your mortgage and own your home free and clear, then sinkhole insurance coverage is optional. However, you may still want to continue maintaining sinkhole coverage as a precaution, as you may need the financial assistance when the sudden sinkhole occurs.

How Much Does Sinkhole Coverage Cost?

On average, the annual cost of sinkhole insurance can range from $2,000 to $4,000 according to Insurance Navy, a non-standard auto insurance provider.[2] In some cases, coverage for this single peril can outpace the cost of a standard home insurance policy.

Therefore, it’s essential to weigh the cost of buying sinkhole insurance against the risk of experiencing one. Naturally, it’s recommended that you buy sinkhole coverage if you live in a high-risk area. If you’re buying a home, it’s recommended you get an assessment of the underlying and surrounding land composition as you may need to budget for sinkhole insurance coverage.

How Do I Get Sinkhole Coverage?

If you live in Tennessee or Florida, any home insurance company you shop with such as USAA, Farmers or Nationwide is required to offer you sinkhole insurance. However, major carriers may not sell sinkhole coverage in other states and you will need to spend more time shopping around.

If you’re struggling to find a national carrier who can insure you, try regional carriers such as Strickler Insurance who serve homes in Pennsylvania, New Jersey, Maryland, Delaware and Virginia.[11]

Keep in mind that a home insurance company may schedule a home insurance inspection before issuing you a quote. This ensures that the price initially offered more accurately aligns with your home’s risks.

Ready To Shop for Homeowners Insurance?


Does homeowners insurance cover sinkholes?

Standard homeowners insurance generally does not cover damages from sinkholes but you can buy coverage via an endorsement or add-on to your policy.

How can I tell if a sinkhole is forming around my home?

Signs that point to a sinkhole forming may include cracking walls, leaning chimneys and depressions in the ground or your foundation. A good way to confirm sinkhole activity is to schedule an assessment with a professional.[12]

Which insurance companies offer sinkhole coverage?

Any carrier that sells home insurance policies in Florida or Tennessee is required to offer sinkhole insurance. If you’re struggling finding coverage from a major carrier in other states, you may need to rely on regional or specialty providers.


  1. National Geographic. “Sinkhole.” Accessed June 2, 2023.
  2. Insurance Navy. “Sinkhole Insurance: What Does It Cover and Do You Need It?” Accessed June 2, 2023.
  3. California Dept. of Insurance. “Earthquake Insurance.” Accessed June 2, 2023.
  4. California Dept. of Insurance. “Coverage for Flood, Mudflow, Mudslide, Debris Flow, Landslide or other Similar Event After a Wildfire,” Page 2. Accessed June 2, 2023.
  5. Online Sunshine. “Florida Statute 627.706.” Accessed June 2, 2023.
  6. Justia. “2010 Tennessee Code Title 56 - Insurance Chapter 7.” Accessed June 2, 2023.
  7. Erie Insurance. “What We Know About Sinkholes, and What We Don’t.” Accessed June 2, 2023.
  8. Insurance Information Institute. “Insurance for Your House and Personal Possessions.” Accessed June 2, 2023.
  9. U.S. Geological Survey. “What Is a Sinkhole?.” Accessed June 2, 2023.
  10. U.S. Geological Survey. “Sinkholes.” Accessed June 2, 2023.
  11. Strickler Insurance. “Sinkhole Insurance.” Accessed June 2, 2023.
  12. Foundation Services. “Florida Sinkholes FAQ.” Accessed June 2, 2023.

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