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Abandoned coal mines pose insurance risks for property owners

The dangers of coal mines are well known, thanks to highly publicized events such as the Chilean mine rescue in October 2010. But the dangers to homeowners living over abandoned coal mines often are less recognized, although they can cost uninsured property owners thousands of dollars in damages.

The threat is not isolated. As many as 500,000 abandoned mines -- which produced coal as well as uranium, copper, gold and other materials -- are located across the country.

“The danger of having your home built above abandoned mines or in the general area of abandoned mines is that the mines can collapse,” says Mike Staley, a policy specialist in the Property and Casualty Division of the Kentucky Department of Insurance.

home insurance abandoned mine

When that occurs, during a process called mine subsidence, the home can drop with the land surface and sag over the mine. In other cases, when a home sits on the edge of an area that experiences mine subsidence, the home could be damaged by cracks in the foundation, the walls or the sidewalks.

And when it does happen, it usually happens suddenly. “Doors can stick, windows can stick. Homeowners may hear popping and cracking sounds,” Staley says.

While you may assume that the owner of the abandoned mine would be responsible for any damages resulting from mine subsidence, that scenario is unlikely. Many owners of abandoned mines have closed their businesses and moved to different parts of the country, making it difficult to find them. Even if a homeowner could locate the owner of an abandoned mine, there likely would be considerable financial and time investments required to sue the owner.

When mine subsidence occurs, insurance is the best method for recouping the costs of damages, but traditional homeowner's insurance policies do not cover subsidence. Instead, homeowners must purchase mine subsidence insurance, which covers any damage caused by abandoned mines.

The case for insurance

“The cost is reasonable,” Staley says. For example, Staley estimates a $300,000 structure in Kentucky might cost about $60 a year to insure.

Despite the availability of mine subsidence insurance, many homeowners don't take advantage of it.

Pennsylvania Department of Environmental Protection Secretary John Hanger estimates more than 1 million homes sit atop abandoned mines in the Keystone State, yet many homeowners there are not insured against catastrophic property losses if these mines collapse. In Pennsylvania, 58,000 mine subsidence insurance policies have been underwritten to cover $8.7 billion in property, up from 53,000 policies in 2002 covering $5.1 billion in property.

home insurance abandoned mines

Because mine subsidence can be so devastating, state governments in areas where abandoned mines are prevalent often have programs set up to make it easier for homeowners to protect themselves through insurance. In Kentucky, the Kentucky Mine Subsidence Insurance Fund ensures that residents of 37 counties can purchase mine subsidence insurance for their homes and businesses. In Pennsylvania, Gov. Edward Rendell has reduced mine subsidence insurance by 20 percent in a move to make it easier for homeowners to afford it.

Many state efforts stem from the federal government’s move in 1984 to send money to states where coal mining takes place to insure property owners against the risk of coal mine subsidence. According to the Abandoned Mine Lands Portal, a joint partnership among several federal and state agencies, 60 percent of abandoned mines can be found in West Virginia, Pennsylvania and Kentucky. However, the problem also exists in other states, particularly in the West.

Assessing your risk

For those who are in states where abandoned mines exist, it’s important to know whether your home could be in danger. “A lot of times it’s common knowledge because you know that mining has taken place in that area for years,” says Kathy Costco, a spokeswoman for West Virginia’s Department of Environmental Protection.

A list of abandoned U.S. mines where coal and other materials were extracted and processed can be found at www.abandonedmines.gov. The U.S. Geological Survey, which does much of the mapping of abandoned mines, is another source of information, Costco says.

Those who are planning to buy homes in mining areas should do ample research before they sign on the dotted line.

“People often don’t realize until after they buy their home that they’re sitting above a mine and it’s distressing to them when they find out, especially if a neighbor has subsidence damage to their home,” says Staley, the Kentucky policy specialist.

For those who do discover that they live above an abandoned mine, there’s no need to panic, as cases of subsidence rarely occur. “Experience shows us that we see about 30 suspected events a year, and of those, two on average are actually confirmed cases of mine subsidence,” Staley says.

The time to purchase mine subsidence insurance is before a mine collapses, since policies generally won’t cover damage that takes place before coverage is fully in effect.

“People need to educate themselves about what mine subsidence is and that there is a financial solution,” Staley says. “Insurance is available.”

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