Sinkholes & property insurance claims: You’ve got that sinking feeling

Some sinkholes may develop without warning, while there may be several signs before others develop. Those occurring on the outskirts of a commercial property may go unnoticed and create specific structural issues for buildings.

Ruptured sewer lines contribute to some urban sinkholes, but generally they are a naturally recurring phenomenon characterized by sudden settlement or collapse of land. They usually occur when underground water or seismic activity creates voids or chasms underneath the surface of the earth. When topsoil becomes heavy with rainwater, is subject to some other stressor, or there is gradual groundwater erosion, the surface collapses into the void, and a sinkhole forms and swallows whatever was sitting on top of it.

Areas built on soft rock, such as limestone, and near underground aquifers are particularly susceptible to sinkholes. While they are found all over the world, the area’s most at risk in the United States are in Florida along what many call Sinkhole Alley, representing Hillsborough, Pinellas, Pasco, & Hernando Counties.

What causes sinkholes?

Sinkholes are the result of water collecting underground and lacking external drainage of some sort, according to the U.S. Geological Survey (USGS). As the water collects and circulates, it slowly erodes the bedrock and creates caverns and underground spaces.

Water can erode just about anything given enough time, but soluble minerals and rocks, like evaporates (salt, gypsum) and carbonates (limestone, dolomite), are particularly vulnerable and can be worn away more easily than some other types of rocks and minerals.

Over an extended period, these caverns grow until the top layer of the ground is no longer supported, then it opens up and swallows anything sitting there, creating a sinkhole.

Adding additional weight on the surface, through structures or even heavy rainfall, can break the top of a cavity and create a sinkhole.

Identifying types of sinkholes

Not all sinkholes are the same. There are three types of natural sinkholes.

1. Dissolution sinkholes.These sinkholes are the result of there not being much ground-cover, like vegetation, over the bedrock. Water slips through pre-existing holes in the bedrock and begins to circulate through it. A depression in the ground can form, and if the bedrock layers beneath are sturdy enough or there is enough debris blocking the flow of water, the sinkhole may stop deepening. This could result in the formation of pond-like areas and even wetlands, according to the USGS.

2. Cover-subsidence sinkholes.These sinkholes start with something permeable covering the sinkhole while also containing a good deal of sand. This sediment begins to spill — or spall as the proper nomenclature refers to it — into those empty caverns among the bedrock. Over time, a depression in the surface may occur. This sediment can block the caverns and prevent the flow of water. These sorts of sinkholes are never very large, according to the Southwest Florida Water Management District, since the sediment prevents the water from further eroding the surrounding bedrock.

3. Cover-collapse sinkholes.Perhaps the most well-known of sinkholes, cover-collapse sinkholes are also the most dramatic. The surface area above the bedrock in this instance is mostly clay and spalls into the cavities, but since the clay is sturdy, arches form as it slowly spalls. This arch continues to support the surface ground until it becomes so thin that it collapses into the cavern below, swallowing up everything above it.

There is one type of man-made sinkhole, which can be the result of a variety of practices such as drilling, mining, changes in water diversion systems or broken pipes.

While sinkholes have a reputation for being sudden occurrences, they happen over long periods of time.

When looking for signs of a sinkhole below a building, the University of Florida recommends being aware of structural cracks in walls and floors, cloudy well water, and doors and windows that won’t close properly.

On the ground, there are likely to be more signs, including wilting or dying vegetation, previously buried items — like fence posts, roots or structural foundations — becoming visible, the formation of new and small ponds, and slumping trees and fences.

Protecting a property

The most important thing to keep in mind is the structure of an insurance and risk management plan. Standard landlord and multi-family structural insurance policies normally do not cover sinkhole risk. A policy review may show that sudden earth movements are excluded. Because the sinkhole risk is not relatively uniform from location to location, sinkhole coverage is usually purchased separately, just like flood, earthquake and windstorm insurance.

Some states, including Florida and Tennessee, require that property insurers offer it, but policyholders may have to opt-in. In Florida, which has many multi-family dwellings and over 19,000 identified sinkholes, insurance companies must make it available for an additional premium.

Residential property insurance companies can issue sinkhole policies with deductibles of one to 10% of the value of the property. In Florida, these policies define sinkholes as “catastrophic ground cover collapse,” meaning “geological activity that results in all of the following:

1. The abrupt collapse of the ground cover;
2. A depression in the ground cover clearly visible to the naked eye;
3. Structural damage to the covered building, including the foundation; and
4. The insured structure being condemned and ordered to be vacated by the government agency authorized by law to do so.

Tenants should secure their own renters insurance policy if they want their belongings covered in the event of a sinkhole destroying their personal property.

Sinkhole warnings

Sinkholes usually take people by surprise, but there are some early warning signs that may occur before a catastrophic ground cover collapse. The following are signs of possible sinkhole activity. The more a home has, the more important it is to have it inspected and evaluated.

• Cracks in the walls.
• Cracks around the door or window frames.
• Cracks in the floor or pavement.
• Cracks in and around the pool area.
• Cracks in the foundation or the structure separating from the foundation.
• Not being able to close doors and windows correctly.
• Pooling of water on the property.
• Slumping or slanting trees or sagging fencing.
• Wilting vegetation in small circular areas.
• High electric or water bills.
• Cabinets or drawers that are not level.
• Gaps between back splashes and walls.
• Loose or cracked shower tiles.
• Hollow sounding floor tiles.
• Floors that are not level.
• Odd water spots or discolorations in walls or ceilings.
• Water leaks or flooding when it rains.
• Slight dips or depressions in the yard.

Signs of sinkhole damage are identified after a property inspection, and the next step is to call the insurance company. The insurer will ask a series of questions including name, policy number, what type of damage is visible, and when it first appeared or was noticed.

Many of these damages can be caused by settling of the home or a loose joist on the foundation. The adjuster’s inspection will determine the type and extent of the damage.

It may be necessary to hire an engineer or geologist to survey the damage and to conduct sinkhole testing. Initial testing for sinkhole activity may consist of ground-penetrating radar and electrical resistivity studies. These tests are used to detect anomalies underground. Standard penetration testing, where a drilling rig bores a hole into the earth, may also be conducted. Sinkhole testing usually takes several days but may be spread out over the course of several weeks depending on the types of tests conducted.

Other insurance issues

Damages from sinkholes are not just limited to fixing or replacing structures affected by ground cover collapse. Business interruption may be necessary if an entire structure needs to be evacuated and there will be a loss of rental income.

Suppose a sinkhole does not damage the building itself? In Florida, it would not qualify using the state’s legal definition of sinkhole, which requires that the structure itself be damaged. However, if it ruptures a gas or water main, or destroys a septic or sewage system, it is still a problem. Utility interruption should provide coverage for an extended loss of communication, water, sewer, gas and electricity.

Sinkhole repairs

In many cases, it is the insured’s responsibility to hire a company to repair a sinkhole, as well as a contractor to make cosmetic repairs. Questions to ask vendors include:

• Are you licensed and insured? There are many unlicensed and uninsured contractors, so it is important to check.

• Is your company a member of the Better Business Bureau? If they are, check their ratings and reviews. Also check on Google, Angie’s List, Yelp, Facebook and Houzz.

• How many years of experience does the company have in sinkhole repair? Select a company whose primary experience is sinkhole repair. Many general contractors with years of experience in general construction will take on sinkhole repair jobs when construction is slow. Work with someone who is focused on sinkhole remediation.

• How up to date are your methods and tools? Ask how well the company has kept up with new advances in the sinkhole remediation process, and what equipment advances they have made since they have been in business.

• Ask to speak with some of their customers. If the company is reputable, they should be able to give you some verified testimonials. It may even be possible to walk a job site with a supervisor.

Sinkholes usually provide some sort of advanced warning if property owners can recognize the signs.

Policyholders should read their insurance policies and understand how they define sinkhole or ground cover collapse hazards and what is covered or excluded. If a property is geologically at risk of sinkhole damage, then separate coverage may be necessary.

Jay Silver (jay.silver@heliconusa.com) is the president of Helicon, a sinkhole repair company based in Tampa, Florida. He has spent his entire career in the construction industry with a primary focus on foundation repair and soil stabilization.