Does Homeowner's Insurance Cover Sinkholes?

8 January 2015
 Categories: Insurance, Articles


Although Canada doesn't have the sinkhole problem plaguing the state of Florida in America, the country has had its fair share of incidents. In 2013, flooding in Calgary led to about 200 sinkholes opening up on highways and in other areas in the province that has cost millions of dollars to repair. If the unthinkable happens and a sinkhole opens up under your home, does your homeowner's insurance cover the damage?

Sinkholes May Sink Your Savings

Most homeowner's insurance policies do cover some disasters such as:

  • Damage from windstorms
  • Fire, lightening or hail damage
  • Explosions
  • Damage caused by vehicles or planes crashing into the home
  • Cave-ins caused by ice, snow or sleet
  • Riots
  • Some accidental flooding
  • Damaged caused by some power surges
  • Vandalism and malicious mischief
  • Smoke

Though this sounds like a fairly comprehensive policy, it does not cover everything. In particular, most homeowner's insurance policies do not cover damage caused by earth movements such as earthquakes, snowslides, mudflows, landslides, shockwaves or sinkholes. So if the ground does cave in under your home and swallows it whole, you could be stuck paying for the damages out of your own pocket.

Does Any Type of Insurance Cover Sinkholes?

Unlike Florida insurance companies, Canadian insurers do not offer policies that specifically cover sinkholes at this point in time. However, you can get earthquake insurance which may cover a variety of earth movement incidents beside quakes including sinkholes. You'll have to carefully review the policy language to be certain the insurer will pay if your home sustains damage in this manner.

Additionally, you'll want to be sure you can file a claim if a sinkhole appears anywhere on your property. Some policies may only pay out when the damage occurs to the home. For instance, a woman in Bexleyheath had a sinkhole open up in her garden. When she called her insurance company, however, she was surprised to learn that her policy only covered the home itself. She's on the hook for paying money out of her pocket to fill the hole before it destroys her house.

While this particular incident occurred in England, insurance companies tend to operate in similar ways the world over, so it's essential that you read the fine print to make you're covered in any eventuality.

Cost of Earthquake Insurance

Earthquake insurance premiums vary according to the region. You can expect to pay anywhere from $15 to $515 per month (based on a home valued at $300,000) depending on the risk factors in your area. People who live in high-risk areas can expect to pay more for the insurance. Additionally, you may be required to pay a deductible before the insurance benefits kick in.

Do You Need It?

Sinkholes can occur as the result of natural phenomenon (e.g. an underground river wearing away the supporting rock) or manmade problems (e.g. a water pipe bursts that goes unrepaired and causes subsurface damage). Although Canada doesn't have the geology that causes the type of sinkholes that occur in other places on earth, there are some areas that have a higher risk of these geological anomalies forming because of various underground conditions.

For instance, in many parts of western Canada—such as British Columbia—there are small underground cave systems that may collapse in on themselves due to contact with an erosive element (e.g. water). In other areas, roadways and housing developments have been built on top of mines or underground railway systems. If you're not sure whether your home is in a high-risk zone, it may be a good idea to have your property inspected by a geological surveyor.

For more information about earthquake insurance that covers sinkholes and other earth movement events, contact an insurance broker who has experience in these types of policies.