Sinkholes are not typically covered by a standard homeowners insurance policy. Sinkhole insurance costs between $2,000 and $4,000 per year.
According to the Insurance Information Institute (III), the risk of having a sinkhole on your property is relatively rare. However, the U.S. Geological Survey recently estimated that between 35% and 40% of all land here in the U.S. is potentially sinkhole prone.
While the actuarial risk of a catastrophic sinkhole happening is low—the potential damage and repair costs can be devastating for homeowners (and business owners). Annual damages from sinkholes cost around $300 million per year in the U.S.
In fact, Florida’s Senate Committee on Banking and Insurance reported that over 24,000 claims for sinkhole damage had been received in recent years — an average of 17 claims per day. The average claim in Florida in 2020 was over $140,000. These claims centered on just six counties well known for sinkhole occurrences: Hillsborough, Pinellas, Hernando, Pasco, Miami-Dade, and Broward.
It all has to do with water! Sinkholes form where there are underground water supplies, both natural and man-made. Natural occurrences can be from aquifers and water tables that are formed in softer rock and soil, like limestone or loose gravel.
Man-made sinkholes can occur where there are broken or leaking water or sewer pipes, abandoned mines, improperly compacted soil during construction, or buried trash in covered landfills. There is some concern that hydraulic fracture mining, better known as fracking, may increase the number of sinkholes in the future.
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