Every Florida homeowners policy from an authorized insurer has to cover “catastrophic ground cover collapse.” Many buyers take that to mean they have sinkhole coverage. They usually don’t. Florida law treats these as two separate coverages. Here is what the statutes say and what to ask before closing.

Key takeaways

• Catastrophic ground cover collapse (CGCC) is required on policies from insurers authorized in Florida (Fla. Stat. 627.706(1)(a)). The definition is narrow: the home has to be condemned and ordered vacated.
• Sinkhole loss coverage is optional. Insurers must make it available for an additional premium, and they may require an inspection first (627.706(1)(b)).
• Settling or cracking alone is not a CGCC loss. The statute says so directly.
• Paid sinkhole claims leave a public record. Reports are recorded with the county clerk, and a seller whose paid claim it was must disclose it before closing (627.7073).

Why Central Florida buyers should care

The Florida Department of Financial Services (DFS) says Florida has more sinkholes than any other state. In much of central and north Florida, the surface soil sits on limestone that slowly dissolves as groundwater rises and falls, leaving voids underneath.

What every policy must include: catastrophic ground cover collapse

Under 627.706(2)(a), a catastrophic ground cover collapse is 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 governmental agency authorized to issue that order.

If any one of the four is missing, the loss is not a CGCC. Contents coverage applies when there is a CGCC loss, but the statute adds that “damage consisting merely of the settling or cracking of a foundation, structure, or building” does not count. An insurer may also limit CGCC and sinkhole coverage to the principal building as the policy defines it (627.706(1)(c)), so pools, driveways and detached structures may be excluded.

Two exceptions to “every policy”: Florida OIR’s residential forms checklist notes that CGCC coverage is not required on tenant policies, and under 626.913(4) the chapter 627 rules generally do not apply to surplus lines policies. If a buyer’s coverage is surplus lines, read the form itself.

What is optional: sinkhole loss coverage

An insurer must make sinkhole loss coverage available “for an appropriate additional premium,” and it may require an inspection of the property before issuing it (627.706(1)(b)). DFS adds that an insurer’s willingness to write it depends on what is under the house. If geological testing shows sinkhole activity on or near the property, the insurer may decline. A residential policy may also carry a separate sinkhole deductible of 1%, 2%, 5% or 10% of the dwelling limit.

If a policy excludes sinkhole losses, 627.706(3) requires a notice in bold type of at least 14 points stating that the policy covers CGCC only when the property is condemned and uninhabitable, and “otherwise, your policy does not provide coverage for sinkhole losses.” Tell buyers to look for that sentence in their policy documents.

The definitions that decide claims

• Sinkhole activity: settlement or systematic weakening of the earth supporting the building, only if it results from soils, sediments or rock moving or raveling into voids created by water acting on limestone or similar rock (627.706(2)(i)).
• Sinkhole loss: structural damage to the covered building, including the foundation, caused by sinkhole activity. Contents and additional living expenses apply only if there is that structural damage (627.706(2)(j)).
• Structural damage (627.706(2)(k)) means the building has experienced at least one of these: floor displacement or deflection beyond accepted variances that makes the interior structure unfit for service or a safety hazard; foundation displacement that keeps primary structural members from carrying their design loads; exterior load-bearing walls listing, leaning or buckling past the “middle one-third” plumb-line test; a significant likelihood of imminent collapse; or “substantial structural damage” as defined in the Florida Building Code.

In plain terms, DFS says the damage has to significantly affect the home’s structural integrity or create a likelihood of imminent collapse. A crack across an interior wall, or floor tiles popping up, may not qualify.

Testing and claim basics (sinkhole coverage)

• Notice deadline: a sinkhole claim, including a supplemental or reopened claim, is barred unless notice is given within 2 years after the policyholder knew or reasonably should have known about the loss (627.706(5)).
• Inspection, then testing: the insurer must inspect. If it confirms structural damage and can’t find a valid cause, or finds the damage consistent with sinkhole loss, it must hire a professional engineer or geologist to test, at its own cost, when sinkhole loss is covered (627.707(1)-(2)).
• Denied without testing: the policyholder may demand testing in writing within 60 days of the denial. They pay 50% of the cost or $2,500, whichever is less, and are reimbursed if sinkhole loss is confirmed (627.707(4)(b)).
• Repairs: on a verified loss, the insurer pays to stabilize the land and building and repair the foundation per its engineer’s recommendations. The policyholder must sign a repair contract within 90 days of the coverage confirmation, and repairs are generally due within 12 months (627.707(5)). Accepting a rebate from the repair contractor voids coverage.
• Disputes: either side can request DFS neutral evaluation once a sinkhole report is issued. It is nonbinding but mandatory if requested, and the insurer pays the reasonable costs (627.7074).

Under 627.7061, asking about coverage is not claim activity unless a claim is actually filed and investigated.

Before-closing checklist for Realtors

For more detail, see sinkhole warning signs a Florida inspection can show, sinkholes and home buying in Central Florida, financing a home with sinkhole history, and our earlier overview, sinkhole insurance in Florida: what is covered.

FAQ

Does a standard Florida homeowners policy cover sinkholes?

It covers catastrophic ground cover collapse, which requires an abrupt collapse, a visible depression, structural damage and a condemnation order. Broader sinkhole loss coverage is an optional add-on.

Can a buyer add sinkhole coverage after closing?

Insurers have to make it available, but they can require an inspection first and can decline if testing shows sinkhole activity. Raise it during the inspection period, not after.

Does a past sinkhole claim cloud the title?

Recorded sinkhole reports are not a lien, encumbrance or title defect under 627.7073. The seller still has to disclose a paid claim and whether the full proceeds were used for repairs.

General education, not legal advice. The buyer’s policy form and declarations control.

Have a buyer heading to closing?

If you want a client’s coverage checked for CGCC versus sinkhole loss before the inspection period ends, call Tariq at 407-476-6667 or request a Florida property insurance quote.
Tariq AbouAdma, Quality RE Insurance LLC · Licensed Insurance Agent NPN 16445652

Sources

• Fla. Stat. 627.706 (2026): Sinkhole insurance; catastrophic ground cover collapse; definitions
• Fla. Stat. 627.7061: Coverage inquiries
• Fla. Stat. 627.707: Investigation of sinkhole claims
• Fla. Stat. 627.7072: Testing standards for sinkholes
• Fla. Stat. 627.7073: Sinkhole reports
• Fla. Stat. 627.7074: Neutral evaluation of disputed sinkhole claims
• Fla. Stat. 626.913(4): Surplus Lines Law scope
• Florida DFS consumer guide: Sinkholes and Catastrophic Ground Cover Collapse (Feb. 2026)
• Florida OIR: Homeowners, Mobile Home, and Dwelling Forms Checklist