In light of some of the recent news we thought we would post a quick blurb about the difference between Catastrophic Ground Collapse coverage and a Sinkhole endorsement. While certainly not unique to Florida, sinkholes can be found pretty much throughout the entire state. While the reasoning behind them is a much debated topic for geologist and environmentalist, we as insurance consumers simply want to understand the basic differences and how it affects our home insurance coverages. While not intended to be a complete definition of the differences between the two coverages we want consumers to at least have a general idea of the two coverages. For insurance purposes, Catastrophic Ground Collapse coverage is a basic coverage that comes standard in most home insurance policies. In addition, it is what most mortgage companies will require you to carry if you have a home loan. There are four basic criteria that must occur for Catastrophic Ground Collapse coverage to come in to play. First, there must be structural damage to the home. In other words, if you own a 100 acres and you have a depression on the back 90 acres and there is no damage to the home itself there will likely be no coverage under the Catastrophic Ground Collapse coverage. Second, there must be sudden collapse of the ground. Cracks that have been in the driveway for the last 50 years that have not gotten any worse may simply be settling cracks from when the home was first built. Third, there must be visible damage to the naked eye. In other words, just because your friend who lives 2 hours away had a sinkhole doesn't necessarily mean that you have one. Fourth and probably the single largest factor is that you must have received condemnation orders. If this has occurred there is a pretty good chance that they other three items have occurred as well.
Now that we have talked about Catastrophic Ground Collapse, lets talk about the endorsement known as Sinkhole coverage. First, let's start out by saying that this is an actual endorsement to a standard home insurance policy. This means unless you have it added to the policy, your policy does not come with this coverage. Second, anytime you endorse a policy with an additional coverage you can expect to pay more based on that additional protection. Depending on where you are located this endorsement may or may not be an expensive addition to your home insurance policy. If you wish to procure this to your policy, your most viable option will more than likely be the state owned insurance company known as Citizens. In order to add the sinkhole endorsement to your policy with Citizens you must go through a sinkhole inspection process and the home must actually qualify for the coverage. It's important to know that the inspection is just one of many tools that Citizens uses when determining if a home qualifies for the sinkhole endorsement. With that said; the inspection costs on average $180.00 of which Citizens pays $90.00 and the homeowner pays the other $90.00. The inspections are done by a third party company of Citizens choosing. Upon completion, both you the homeowner and Citizens will receive a copy of the inspection report. If approved, the sinkhole endorsement will then be added to the policy. If at some point in time you think you might have a potential sinkhole issue, you can then file the claim with your insurance carrier without having to go through the four qualifying factors listed above. Lastly, keep in mind that you may have a 10% sinkhole deductible. This is 10% of your dwelling amount. As always, before making any changes to your policy talk to your local independent Florida insurance agent that is familiar with Florida's unique insurance landscape.