Home Insurance and Soil Movement

There are 20 homes in Carrollton, Texas on Barclay Drive which back up to Dudley Branch Creek. The retaining wall behind the homes is failing causing the lots to sink as the soil begins to move downhill toward the creek. Some of the residents have filed a lawsuit against the city of Carrollton saying it’s responsible for repairing the retaining wall while the city contends it’s the homeowners’ responsibility to repair the wall. The estimated cost to repair the wall is $3 million. Home insurance won’t help the homeowners either.

Most Texas home insurance policies don’t cover damage to a home caused by soil movement or erosion. This exclusion is why earthquake damage isn’t covered and requires either an earthquake policy or optional coverage to be added to the home insurance policy. Neither would home insurance cover damage to the homes caused by the creek flooding and undercutting or washing out the retaining wall or stream bank leading to the homes slide into the creek. Such damage would only be covered by a flood policy.

If the homeowners have foundation coverage, they may pay for damage caused to the home by a leaking pipe. The claims adjuster would need to determine the leak was not caused by a sinking home, and even then, it doesn’t solve the bigger problem of the failing retaining wall. Many policies even exclude coverage for a failing retaining wall leaving the homeowners responsible for the repairs. I’ve actually seen this happen once in my career.

Further exacerbating the homeowners’ situation is the fact the home developer has gone out of business. The retaining wall was repaired twice before. Once by the developer in 1987 before going out of business and another time by the city in 1996 behind 6 of the 20 homes. This raises the question as to why the city of Carrollton is refusing to repair the wall this time unless they don’t want to pay the amount needed to properly repair the wall.

This leaves the homeowners with only two options; they can sue the city for the repairs or pay for the repairs themselves. The city contends the land the retaining wall sits on is state, not city land which is why they are refusing to repair it this time. The homeowners are hopeful the court will decide in their favor, but there’s no guarantee they will.

This leaves the rest of us with a couple of interesting lessons. Realize no home insurance policy provides coverage for soil movement, erosion, or even a failing retaining wall. I would not recommend anyone buy a home where a retaining wall is present or needed. Set aside funds to repair a retaining wall if you own a home where a one is present. Consider buying a flood policy if there is a creek that runs alongside your property, even if the home sits outside the known flood zone.

What would you do? Share your thoughts, suggestions, and questions with me on our Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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