Maybe. The key questions are whether the home can be insured and whether the problem was properly repaired. Florida law requires insurers to cover catastrophic ground cover collapse, but other sinkhole damage needs optional coverage. Get an insurance quote and an engineer's report before you rely on the loan.
The Florida Department of Financial Services explains that all insurers licensed in Florida must offer sinkhole coverage, and that state law requires coverage for catastrophic ground cover collapse. That coverage is narrow. Damage such as settling or cracking of a foundation does not by itself count.
Sellers are required to disclose a previous sinkhole claim and the amount paid. Ask for the claim file, the engineering reports and proof that repairs were completed and by whom.
Lenders and insurers both care about the same facts: is the home stable now, is there a repair record, and can acceptable insurance be bound? DFS advises buyers to call an insurance agent to learn whether the home is insurable and to hire an inspector who can help identify issues.
Two kinds of Florida ground collapse coverage
| Coverage | What it covers |
|---|---|
| Catastrophic ground cover collapse | Required in Florida property policies. Narrow: an abrupt collapse with a visible depression and serious structural damage |
| Sinkhole loss coverage | Optional. Broader structural and foundation damage caused by sinkhole activity |
Summary of s. 627.706 and DFS guidance.
What to do
- Ask the seller for sinkhole claim and repair records.
- Hire a licensed engineer or inspector to evaluate the property.
- Ask an agent whether you can get both coverages and at what cost.
- Send the reports and quotes to your lender before the inspection period ends.
- Have your attorney review the seller's disclosures.
General information, not legal or tax advice. Confirm with your title company or attorney.
Sources
- Florida Department of Financial Services, Sinkholes and Catastrophic Ground Cover Collapse guide. Insurers must cover catastrophic ground cover collapse and offer sinkhole coverage; advice for buyers. Source type: Official. Checked October 17, 2026.
- Florida Statutes s. 627.706, Sinkhole insurance; catastrophic ground cover collapse; definitions. Definition of catastrophic ground cover collapse (2017 version). Source type: Official. Checked October 17, 2026.
- Butler PAPPAS, Sinkholes, Florida law and the Land O'Lakes collapse. Seller disclosure of paid sinkhole claims. Source type: Secondary. Checked October 17, 2026.