The recent heavy and frequent rains have created a couple of headline-making sinkholes in the area. Does the standard ISO HO-3 or DP-3 policy provide coverage if a house falls into a sinkhole? The short answer is “No“.

Under General Exclusions, the Earth Movement section excludes “any other earth movement including earth sinking…”

There’s an endorsement entitled Sinkhole Collapse (HO 04 99 04 91) that some insurance companies may allow to be attached to a homeowners policy. Note that this endorsement covers sinkhole damage “only when such settlement or collapse results from subterranean voids created by the action of water on limestone or similar rock formations”.

This can be an important distinction as some sinkholes are caused by mining and abandoned mines. In such cases, the correct endorsement to use would be Mine Subsidence (HO 23 83 03 01).

Earthquake policies/endorsements would not provide coverage as an earthquake is usually defined as a “seismic event”. A sinkhole is not a seismic event.

The Comprehensive coverage under a personal auto policy would provide coverage if a car fell into a sinkhole.

The three Causes of Loss forms for Commercial property policies do provide sinkhole coverage. Mine Subsidence is not covered, but endorsement IL 09 03 07 02 may be available to add the coverage. Business owners policies appear to provide coverage for sinkholes but not Mine Subsidence.

As with all insurance questions, however, you must read your own policy to determine your coverage!

Posted 11:25 AM

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