4.6 Illinois Mine Subsidence Insurance and Earthquake Coverage

Why Mine Subsidence Is on an Illinois Exam

Coal, clay, limestone, and fluorspar mining left large voids under parts of Illinois. The Illinois State Geological Survey, as summarized by the Fund, estimates about 323,500 acres of urban and developed land near mines and about 360,100 housing units with possible exposure. Standard property forms exclude earth movement, including mine subsidence, so Illinois created a statutory coverage system in Article XXXVIIIA of the Insurance Code (215 ILCS 5/801.1-812.1). The Pearson outline lists Mine subsidence as its own personal lines topic.

Definitions (215 ILCS 5/802.1)

• Mine subsidence: lateral or vertical ground movement caused by a failure initiated at the mine level of man-made underground mines, including coal, clay, limestone, and fluorspar mines, that directly damages residences or commercial buildings. It does not include movement caused by earthquake, landslide, volcanic eruption, soil conditions, soil erosion, soil freezing and thawing, improperly compacted soil, construction defects, roots of trees and shrubs, or collapse of storm and sewer drains and rapid transit tunnels.
• Residence: a building used principally for residential purposes, up to and including a 4-family dwelling, including appurtenant structures, driveways, sidewalks, basements, footings, foundations, septic systems, and underground pipes directly serving it. It excludes living units, land, trees, plants, crops, and farm drainage tile.
• Commercial building: any non-residential building, including basements, footings, foundations, septic systems, and underground service pipes, but not sidewalks, driveways, parking lots, land, landscaping, or drainage tile.
• Living unit: a condominium, cooperative, or similar unit in a building with common elements.
• Policy: any contract providing the coverage of the Standard Fire Policy and Extended Coverage Endorsement on a residence, living unit, or commercial building. Marine and inland marine policies are not included.

How Coverage Attaches (215 ILCS 5/805.1 and 807.1)

Limits. The Fund is a reinsurer. It does not set the policy limit; it sets the maximum amount reinsurable, which since July 1, 2011 has been $750,000 for residential and commercial structures and $15,000 for living units. The statutory floor is $200,000 per residence or commercial building and $15,000 per living unit. The mine subsidence limit is usually the same as the building's fire limit, up to the reinsured maximum. Living unit coverage pays for improvements and betterments, additional living expense, and assessments made against the owner because of mine subsidence.

Additional living expense. Residential coverage may also pay reasonable additional living expenses of a temporarily displaced owner if the underlying policy covers that type of loss.

Claims Rules

1. One occurrence. All damage from one mine subsidence event, or from continuous events, is one occurrence (805.1(e)).
2. Which limit applies. Reimbursement is limited to the coverage in force when the damage first becomes reasonably observable. A buyer of a damaged home may receive the seller's remaining claim rights only through an assignment and only up to that same limit.
3. Continuing coverage. After the Fund confirms active mine subsidence, the insurer must tell the insured within 60 days that continued coverage on the damaged building may not be necessary and is optional. If the insured signs a waiver, premiums paid after the established date of loss are refunded within 60 days.
4. Arbitration (809.1). If the insurer decides the damage was not caused by mine subsidence and notifies the insured in writing with a reference to Section 809.1, the policyholder may start arbitration within 60 days under the American Arbitration Association's Commercial Arbitration Rules. The losing party pays all arbitration costs. The amount of loss cannot be arbitrated under this section; it is resolved under the policy, including appraisal where available.

Recognizing mine subsidence damage

The Fund describes two common forms:

Building signs include stair-step or diagonal cracks in masonry, sticking doors and windows, sloping floors, cracked driveways and sidewalks, and broken utility lines. Because settlement, frost heave, and expansive clay also cause these symptoms and are excluded by the definition, a public adjuster should document crack patterns over time, gather mine maps from the Illinois State Geological Survey, and expect the Fund's engineers to investigate causation.

The 2027 Amendments (P.A. 104-519)

Effective January 1, 2027, P.A. 104-519 restructures the Fund as a private, taxable reinsurer, and for policies issued or renewed on or after that date provides that no deductible or retention applies to mine subsidence damage. It also requires insurers in exempt counties to make coverage available on request, requires written notice of availability at renewal when coverage was previously waived, and allows coverage of debris removal, moving and storage of contents, and landscaping repair when necessary to repair covered damage. Before that date, losses are paid above the deductible or retention set by the Fund.

Earthquake Coverage

Earth movement is excluded in homeowners, dwelling, and commercial causes of loss forms, with an exception for ensuing fire or explosion. Southern Illinois lies near the New Madrid Seismic Zone and the Wabash Valley Seismic Zone, so earthquake coverage is a real exposure.

Earthquake versus mine subsidence. Mine subsidence coverage does not pay for earthquake damage, and an earthquake endorsement does not pay for mine subsidence. A public adjuster must identify the cause, because the coverage, the deductible, and the claim process all differ.

Percentage deductible example. A home with a $300,000 Coverage A limit has a 10% earthquake deductible, or $30,000. Earthquake damage of $52,000 produces a payment of $22,000. The same $52,000 of damage caused by covered mine subsidence on a policy issued or renewed after January 1, 2027 would carry no mine subsidence deductible.