Q: I am in the process of buying a home that had a sinkhole issue and remediated. As I understand it there are 2 types of sinkhole coverage (1) catastrophic where the house becomes uninhabitable,(2)all other sinkhole issues & activity. I’m sure the second is most expensive.
There are two types of sinkhole coverage here in Florida and your question is correct on several accounts. Catastrophic ground cover collapse is a mandatory coverage here in Florida. Currently all carriers must cover a claim that would meet the definition of a catastrophic claim. You are essentially correct that the home would have to be deemed uninhabitable before the insurance company would owe. This is such a rare event that having catastrophic coverage in my opinion is close to worthless. I do hear a lot of homeowners who feel comforted in knowing that they have this protection should the worst of the worse happen but reality is this coverage is close to impossible to tap into without your house quite literally caving in. If the home has been remediated already, the likelihood of a catastrophic collapse occurring should theoretically be even less.
You are also correct that your standard sinkhole coverage is more expensive as it is an optional coverage. You will likely have a really hard time finding any insurance company to insure this home with a standard sinkhole endorsement. Even if the home was repaired, the risk of insuring this home against any future sinkhole related problems is too great for the majority of carriers in this State. You may be stuck with only carrying catastrophic ground cover collapse coverage on this house.