Sinkhole Coverage: Does Car Insurance Cover Sinkholes?

Comprehensive car insurance coverage can compensate you in the event of a sinkhole. It also includes coverage for weather-related events, including hail and floods, along with other non-collision incidents, such as auto theft and vandalism.

But comprehensive coverage isn’t required by law in any state; you may not have it if you purchased only the minimum coverage instead of full coverage auto insurance. Check your policy to see if it’s comprehensive.

If you have comprehensive car insurance and experience a sinkhole incident, here are the steps you’d take to file a car insurance claim for a sinkhole:

1. Take pictures. Document the sinkhole damage and take notes on its location, size, and any other details you observe.
2. Submit a claim. Tell your auto insurance agent about the sinkhole, and provide your photos and notes. Alternatively, many insurance companies allow you to submit a claim online.
3. Meet with an adjuster. A claims adjuster will review the damages, either in person or through your photos, and determine how much coverage you’ll receive.
4. Sign a proof of loss statement. You’ll need to sign a statement that shows your proof of loss; you can add damages to this statement later if need be.

Learn more about insurance claims and how long insurance claims take.

Your car isn’t the only thing that sinkholes can, well, sink. Sinkholes can affect your other property, including your house.

Does Homeowners Insurance Cover Sinkholes?

Homeowners insurance does not cover sinkholes; it only covers the cost to rebuild your house, not the land’s real estate value. So, if you have property insurance, it excludes sinkholes. Sinkholes are hard to predict and investigate – and very costly to repair.

However, states like Florida and Texas require homeowners insurance providers to offer sinkhole coverage in one of two forms:

• An endorsement to property insurance
• A stand-alone policy (additional coverage)

Note that sinkhole coverage is different from catastrophic ground cover collapse coverage, which is a required part of standard homeowners policies in Florida. Catastrophic ground cover collapse means the damage is bad enough to make a home uninhabitable. It’s defined by four factors:

• The ground cover has collapsed abruptly.
• There is a depression in the ground that’s clearly visible to the naked eye.
• There is structural damage to the covered building (including damage to the foundation).
• The covered building is condemned, and an authorized government agency has forced its inhabitants to vacate.¹

Not everyone needs sinkhole coverage, which falls under comprehensive coverage. Whether you need sinkhole coverage depends on the history of sinkholes in your area and how much risk you’re willing to take.

Who Needs Sinkhole Coverage?

If you have a new car, a broken-down car, or a car in storage, comprehensive coverage is already necessary. Although sinkholes are relatively rare, comprehensive coverage protects you in a wide range of incidents, from car theft to vandalism to hail, so we recommend getting comprehensive coverage for any new car.

Sinkhole coverage is worth it for new cars, because if a sinkhole or other covered event occurs, you’ll likely only have to pay a deductible, which averages $500. You could receive thousands of dollars of coverage. However, if you have an older car, sinkhole coverage isn’t really worth it, as your repairs will likely cost more than the car itself.

Sinkhole coverage covers the costs of either repairing or replacing your car after sinkhole damage.

If your car is totaled because of a sinkhole, your insurance provider will pay you the car’s actual market value (AMV) — which is the price you’d get if you sold it tomorrow, not what you initially paid for the car. To make up this difference, you’d need gap insurance, a completely separate policy.

As part of comprehensive coverage, sinkhole coverage costs an average of $184.14 annually. However, some states have more expensive coverage than others.

Sinkhole coverage is similar to many other types of insurance. Here’s how it works:

1. File a claim. The first step is filing a claim that demonstrates the extent of the property damage.
2. Pay your deductible. If you haven’t already paid your comprehensive auto insurance deductible, you’ll be responsible for it upfront.
3. Get reimbursed. Once you’ve met your deductible, your insurance company will pay you for the remainder of the repair or replacement costs up to your car’s AMV.

To clarify how deductibles work when it comes to sinkholes, let’s take a more in-depth look at comprehensive deductibles in general.

What Is a Comprehensive Deductible?

A comprehensive deductible is the amount you’ll pay toward a covered comprehensive claim before your insurance provider contributes. Comprehensive deductibles range from $0 to $2,000, with a $500 average.

How to Choose a Comprehensive Deductible

To choose a comprehensive deductible, follow these steps:

1. Determine a reasonable amount. Figure out the amount you could pay if you had a covered claim tomorrow. While higher deductibles mean lower auto insurance premiums, if you can’t pay your deductible, you can’t get auto insurance coverage.
2. Consider your premiums. Balance the deductible amount with the amount you’ll pay for your auto insurance premiums. A low deductible means you’ll pay less for covered claims, but you’ll also pay more for car insurance.

How Comprehensive Deductibles Work

Here’s what happens in the comprehensive deductible process:

1. The claim is verified. The insurance company determines that your policy covers the sinkhole claim you submitted.
2. You pay the deductible. You’ll pay part of the deductible if your repairs cost less than the deductible total, or 100 percent of the deductible if your repairs cost the same as or more than your deductible.
3. The insurance provider pays the rest. Your insurance will cover the remaining cost of the repairs or replacement of your vehicle up to its AMV. You won’t have to pay your deductible again during the same policy term if you’ve already met it.

You can get sinkhole coverage in a few simple steps:

1. Contact your insurance agent or broker.
2. Ask them to add comprehensive coverage to your auto insurance policy.
3. Pay your premium. Your coverage will begin on your policy’s effective date.
4. Make sure to pay your premium on time so you don’t risk cancellation.

Here are some common questions and more information about sinkholes, the scary weather event you’ve probably seen on the news.

What Are Sinkholes?

Sinkholes are depressions in the ground’s surface — think of them as holes in the ground. They’re a natural component of many states’ landscapes.

What Causes Sinkholes?

An abrupt collapse or settlement of land causes sinkhole activity. In the most general terms, earth movement causes sinkholes.

In detailed terms, underground water supplies dissolve rock, like an aquifer dissolving limestone. By dissolving small amounts of rock, moving water enlarges the bedrock’s natural pores and cracks. Over time, as the rock disintegrates, caves and cavities form. Once the land gives in to fill the voids, a sinkhole forms.

These circumstances also cause sinkholes:

• Building in vulnerable areas
• Drought conditions
• Falling water tables

The Risk of Sinkholes

While sinkholes can be destructive, they’re relatively rare: The chance of a catastrophic sinkhole is only 1 in 100 per year. However, if you’re a homeowner – especially in an area that’s shown sinkhole vulnerability in the past – they’re something to consider insuring against.

The Worst States for Sinkholes

Unfortunately, there’s no national database of sinkhole collapses, according to the U.S. Geological Survey. Many sinkholes aren’t reported to news organizations or emergency services, and many occur in rural areas where they’re unobserved by the human eye. That being said, sinkholes are most common in Texas, Alabama, Missouri, Kentucky, Pennsylvania, Florida, and Tennessee.³

Learn more about the minimum car insurance in Florida or the minimum car insurance in Texas.

Spotlight: The Ottawa Sinkhole

In 2016, a sinkhole took the spotlight in a spectacular manner when it formed under a tunnel being built for a light-rail track in Ottawa, Canada. The sinkhole swallowed a van, which was later left in its jaws and filled over with concrete. Talk about pushing things under the rug!

The city of Ottawa filed a $230 million insurance claim for the sinkhole’s costs, but it only received $1.7 million in compensation for police resources and traffic disruptions. The compensation didn’t cover the costs of repairing the sinkhole or the delays in completing the tunnel project.

In May 2021, the city claimed that its insurers breached their policy, but it remains to be seen if Ottawa will get the coverage it needs to rebuild.⁴

Whether you have home insurance or auto insurance, sinkhole coverage isn’t required anywhere in the U.S. That’s why we recommend getting sinkhole coverage for homeowners insurance and comprehensive coverage for auto insurance, as liability coverage doesn’t include sinkholes. Compare full coverage vs. liability to learn more.