When heavy rains roll in, you may discover that they have taken with them some of your land. This can be a small amount of your yard, or it can shift your entire house, meaning you will have to make repairs to it. If you find yourself losing your yard to erosion, you may assume your insurance policy will cover you, but unfortunately, “earth movements” are usually excluded from homeowner’s insurance policies.
Most insurance policies have exclusions they will not cover, which usually includes earthquakes, sinkholes, landslides, and mudslides — all of which are considered earth movements.
The U.S. Geological Survey estimated that the annual losses for landslides in the country is between $2 billion and $4 billion per year, so if you are hit with one, you may be looking at an expensive bill.
If your home is in a location that is susceptible to landslides or erosion, you can — and probably should — put up a retaining wall to help keep the ground where it belongs. Home insurance policies often cover detached structures like garages, sheds, fences, and retaining walls. So, if you have a retaining wall that gets damaged by a covered loss like wind, fire, or lighting, you may be able to use your insurance coverage to repair your retaining wall.
If you have a retaining wall and it collapses during an event, your insurance still may not cover you, since it is still an earth movement. However, you might be able to purchase an earthquake insurance policy that — depending on your insurance company — may cover at least part of the landslide. Even if it does not cover the landslide itself, the earthquake policy might help cover damages to your home and detached structures.
Areas that have a high risk for erosion often have frequent flooding problems, so you might be eligible for the National Flood Insurance Program (NFIP). This is run by the federal government and provides price-controlled flood insurance. Many NFIP policies cover erosion if it is caused by flooding.
Difference in Conditions (DIC) Insurance is an insurance policy that covers some of the perils that are excluded from a standard policy. DIC insurance can provide you with coverage for a landslide or mudslide, along with some other perils that are excluded. If you live in an area where you think your backyard could literally be washed away when a storm rolls in, it is worthwhile to look into getting DIC insurance. These policies are a little easier to customize than a standard insurance policy is, since you only need specific parts of it.
DIC policies can be expensive, with a deductible that is based on a percentage of the replacement cost of your home, instead of a fixed amount like other insurance companies do. It is most often between five and 20 percent of the total replacement cost of your home.