Victims of recent storms in Missouri will not be covered under their standard homeowners insurance policies from damage by sinkholes, according to the state’s Department of Insurance. Property owners in the state are also not covered by earthquakes on their typical homeowners insurance policy, despite the state ranking among the top three in annual tremors. The lack of such coverage, especially after the severe storms of December 2015, could cost homeowners millions of dollars in repairs.
How Sinkholes Form
A sinkhole forms when water seeps into underground limestone deposits. As the water flows through the soil, the vegetation and bacteria in the soil turn the water into a weak acid. The acid then dissolves the limestone deposits, creating a pit over the soil. When the soil becomes too heavy to support its own weight, it sinks into the pit of dissolved limestone. States such as Missouri and Florida are rich in underground limestone deposits, and are prone to sinkholes after heavy rains.
Sinkholes Pose Homeowners Insurance Problems
The major storm system that tore through the state over the holiday weekend created conditions favorable for sinkholes. A typical homeowners insurance policy will cover damage from storms, including wind, hail and lightning damage. However, the standard homeowners insurance policy does not cover damages from sinkholes. These policies also do not cover other damages related to storm surges, such as floods or backups from sewer or drainage systems.
Homeowners Insurance vs. Commercial Insurance
In Missouri, commercial insurance policies include coverage for sinkhole damage. Mutual insurance policies also offer sinkhole damage protection. However, homeowners insurance policies do not offer such coverage. A report from the state’s Department of Natural Resources shows that nearly 16,000 sinkholes have been verified across the state, with more expected to come after a complete assessment of the damage from the recent storms. This lack of protection from such a widespread natural disaster could pose significant problems from homeowners insurance customers.
Homeowners Insurance Providers Work With Legislators
Larry Case, the executive vice president of the Missouri Association of Insurance Agents, told reporters that his group is working with state legislators to provide such protection to homeowners insurance policy holders. He said that “there needs to be a reasonable solution” for homeowners insurance customers seeking protection from sinkholes and earthquakes. According to Mr. Case, the major hurdle lies with the high deductible payments required for such coverage, which can be up to 15 percent of the value of the home and its contents.
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NOTE: This blog post is a news story and does not imply an endorsement of Arguello Law Firm by any of the parties mentioned herein.