SB326 Alabama 2024 Session

Summary

Primary Sponsor

Tim MelsonSenator

Republican

Session

Regular Session 2024

Title

Sinkhole loss insurance coverage, homeowners insurance policies, require to cover catastrophic ground cover collapse and optional coverage for sinkhole damage.

Summary

SB326 would require Alabama homeowners insurance to cover catastrophic ground cover collapse and offer optional sinkhole coverage with an explicit investigation and repair process.

What This Bill Does

If enacted, every homeowners insurance policy would include coverage for catastrophic ground cover collapse and insurers would offer optional sinkhole loss coverage for an additional premium. The bill sets up a formal claim investigation process using licensed engineers or geologists, outlines how the costs of testing and repairs are handled, and establishes timelines for stabilization and foundation work. It also defines how nonrenewals, endorsements, and disclosures work when sinkhole coverage is added or removed, and when reports must be filed with local authorities.

Who It Affects

• Homeowners and policyholders: They would automatically gain catastrophic ground cover collapse coverage, can add sinkhole loss coverage for a extra premium, may face deductibles, testing costs, and repair timelines, and would have specific testing and reporting rights.
• Insurance companies: They must offer and price the coverage, conduct mandated investigations, pay stabilization and repair costs if sinkhole loss is verified, handle information sharing and filings with probate offices, and follow rules around nonrenewal and endorsements.

Key Provisions

• Mandatory catastrophic ground cover collapse coverage in all homeowners policies, with optional sinkhole loss coverage available for an additional premium.
• Deductible options for sinkhole coverage set at 1%, 2%, 5%, or 10% of dwelling limits, with premium discounts for different deductibles.
• Insurers may limit coverage to the principal building and may require an inspection before issuing sinkhole coverage.
• A formal claim investigation process using licensed professional engineers or geologists to determine presence and cause of sinkhole loss, including required testing and reporting.
• Costs for testing and professional services may be shared: policyholders pay up to 50% of actual costs or $2,500, whichever is less, with insurers reimbursing if sinkhole loss is confirmed.
• If sinkhole loss is verified, insurers must pay for land stabilization, building stabilization, and foundation repair per the engineer’s recommendations, with repairs completed within specified timelines and options for direct payment to contractors.
• Policyholders must enter into stabilization and repair contracts within 90 days of confirming coverage, and repairs must be completed within 12 months unless certain exceptions apply.
• If the insurer pays up to policy limits for a sinkhole loss, it may nonrenew the policy; policyholders must be informed and offered an option to obtain a sinkhole coverage endorsement.
• Insurers must file and record sinkhole reports with the county clerk or judge of probate, and disclose to buyers at closing if a sinkhole claim has been paid on the property.
• Effective date is October 1, 2024.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance