This is an issue that arises in some claims, especially where the homeowner owns a larger lot or acreage. Insurance policies in Florida do specifically state that they carrier only insures the house and not the land the house sits on. This language was hotly debated many years ago as insurance companies argued the theory that a sinkhole is a defect in the land and since the policy does not insure the land the carriers did not have to pay for the repairs to the land. This obviously failed or we would not be here today. The simple argument in response is that sinkhole activity may begin below the surface but it manifests at the surface to the point where it does effect the home itself and therefore, the repairs are necessary to stop progressive damage to the home. Luckily we do not have to deal with that view anymore but, it still does come in to play.
We have had clients with large properties that have actually had trees or fences fall down due to sinkhole activity on the property. If the sinkhole is not affecting the home itself, the carrier will likely deny the claim. The key focal point is whether or not the sinkhole is affecting the home or some other structure. Some other structure could arguably be a fence, shed or garage that is some distance away from the home but still covered under the policy. It is a tough position for a carrier to take as a jury may have a tough time seeing photos of a collapsed sinkhole and hear testimony about the dangers of the sinkhole and then understand why the insurance company will not pay to repair the hazard. I am not aware of this particular issue being tried in front of a jury but it seems like a tough sell for an insurance company and those cases will typically resolve through a compromise.