Sinkholes have been all over the news in Florida lately, in particular after this tragic incident that occurred near Tampa.
The fact is, sinkholes are a part of life here in Florida, much like earthquakes, tornadoes, blizzards, and other natural disasters are part of life in other parts of the country.
They even sometimes occur in one of the most popular retirement communities.
While you can't totally avoid mother nature, you can educate yourself and take steps to protect your retirement investment here in Florida.
A 30-second Sinkhole Primer
Generally, sinkholes in Florida occur when acidic rain eats away at the limestone and natural caverns present under much of the state. This process can occur over thousands of years before a visible sinkhole ever develops.
You can read a much more scientific explanation on the Florida Department of Environmental Protection/Florida Geological Survey website.
Now that you know a little bit more about sinkholes, let's figure out how you can protect yourself.
How to spot a sinkhole before it forms. Can you, REALLY?
If you look online you can find many articles that talk about how to identify the signs of sinkhole activity.
The problem is, there's no way to actually verify a sinkhole actually exists until after it happens.
Many of the warning signs such as cracks in walls and sidewalks can (and do) frequently happen for a number of reasons.
Most new homes will experience a small amount of settling within the first year or two, and this almost always causes drywall cracks inside, and even cracks in exterior walls. Most of the time these are easily repaired, and are not due to a sinkhole at all, even though they are considered to be a warning sign.
Also, the #1 cause of driveway and sidewalk cracks are actually nearby tree roots, not sinkholes.
One more sobering fact in this regard. The man who was swallowed up by that sinkhole near Tampa a few months back actually had his home inspected for sinkholes by his insurance company before his policy renewal and the inspector found no signs of sinkhole activity.
Types of Florida Sinkhole Insurance
There are basically two types of sinkhole coverage in Florida: Catastrophic and Comprehensive.
The insurance commissioner’s office requires every company selling homeowners in Florida to provide Catastrophic Ground Collapse coverage. Basically this coverage states that if a sinkhole opens up under your home and it is deemed unsafe for habitation then you are covered.
But what about more minor sinkholes that cause damage to your home, but don't exactly leave it uninhabitable?
For those instances, you would want to have Comprehensive coverage.
Comprehensive coverage can be hard to get, and it can be expensive if do get it. Not all Florida insurance companies will offer this kind of policy, so you'll need to check around. Your real estate agent might be a good place to start and see if they have any recommendations.
According to one insurance agent I talked to comprehensive coverage typically adds $400 to $600 annually and that's with a 10% deductible which, depending on what your home is insured for, can get pretty high should you ever need to file a claim. But, when you consider that sink hole repair including testing is between $50,000 and $100,000, it might be a relative “bargain”, if such a word can even be used here.
Some people will want the extra peace of mind that this type of coverage can buy, and others will roll the dice and go without it.