Guides
Foundation cracks and settling: what's covered
A standard homeowners policy excludes settling, soil movement and water pressure, so cause decides whether foundation damage is paid. What is covered.
A standard homeowners policy does not pay to repair a foundation that has cracked or sunk because of settling, shrinking or expanding soil, groundwater pressure or frost. It does pay when a covered event damages the foundation, such as a vehicle strike, a fire, an explosion or, depending on the form and the state, a sudden plumbing leak. Whether a crack is covered depends almost entirely on what caused it, which is why these claims turn on an engineer's report, not on the size of the crack.
This guide uses the ISO HO-3 (form HO 00 03 05 11). Your insurer's own form and your state's endorsements may differ, particularly in Texas, Florida and other states with soil problems, so read your policy.
The exclusions an adjuster will cite
The HO-3 covers the house on an open-perils basis, which sounds broad, but several provisions sit directly over foundation damage:
- Settling and its relatives. The policy does not insure loss from settling, shrinking, bulging or expansion, "including resultant cracking," of footings, foundations, walls, floors, pavements and patios. It sits with the wear and tear exclusions in the Coverage A and B section, so it reads like a maintenance condition.
- Earth movement. Section I excludes earthquake, landslide, mudflow, subsidence, sinkholes and any other earth sinking, rising or shifting, whether natural or caused by people. See the earth movement exclusion explained. Fire, explosion or theft that results from earth movement stays covered.
- Water below the ground. The water exclusion removes water below the surface of the ground, including water that exerts pressure on, or seeps, leaks or flows through, a foundation. Hydrostatic pressure that bows a basement wall and groundwater seeping through a crack fall here.
- Freezing and thawing. Pressure or weight of water or ice, or freezing and thawing, damaging a footing, foundation, retaining wall, patio or pavement is excluded.
- Faulty construction. Faulty or defective design, workmanship, grading, compaction, materials or maintenance is excluded, although an ensuing loss that is not otherwise excluded is covered.
The earth movement and water exclusions carry the form's opening wording that the loss is excluded regardless of any other cause or event contributing concurrently or in any sequence. That is the anti-concurrent causation language, and it is why a foundation claim that mixes a covered cause with an excluded one so often goes badly for the homeowner under an ISO-based form. Some states apply rules, such as efficient proximate cause, that limit it.
What can be covered
Foundation damage is covered when the loss comes from something the policy insures and no exclusion overrides it.
- A vehicle, fire or explosion. Impact from a car or a fire that damages the foundation is a covered loss (when a car crashes into your house: who pays and how, fire and smoke damage: how homeowners insurance responds).
- A sudden plumbing discharge. The HO-3 covers loss from accidental discharge or overflow of water from a plumbing or heating system inside the house, including the cost to tear out and replace part of the building to reach the leak, but not the pipe itself. Whether that carries over to a foundation that shifts after a slab leak is one of the most disputed questions in homeowners insurance. The earth movement exclusion and the anti-concurrent causation language are the insurer's usual arguments, and decisions have gone both ways. Texas shows how unsettled it has been. In a 1997 bulletin the Texas Department of Insurance said that the then-standard Texas HO-B form covered foundation damage from an accidental discharge, and it disagreed with a federal appeals court that had held otherwise (TDI Bulletin B-0032-97). That form has since given way to newer policy forms, so the bulletin shows how contested the question was, not what your policy says. slab leaks and tear-out coverage covers the details.
- Abrupt collapse. The HO-3 has an additional coverage for abrupt collapse of a building, meaning it falls down or caves in so it cannot be occupied, from listed causes such as hidden decay. It does not cover a standing house that merely shows cracking, sagging or settling. Foundations are on the carve-out list unless a building collapse causes the foundation loss. See collapse coverage: what counts as a collapse.
- Sinkholes. The HO-3's earth movement exclusion takes sinkholes out, but Florida law requires insurers to cover catastrophic ground cover collapse and to offer broader sinkhole coverage. See sinkhole and catastrophic ground cover collapse coverage explained and Florida.
- Foundation endorsements. The Texas Department of Insurance's home insurance guide lists damage to foundations or slabs among the common endorsements that homeowners can add (TDI). Endorsements of this kind are typically written around water or steam leaking from the plumbing, with a dollar cap, so read the trigger, limit and exclusions before relying on one.
Cause by cause
| What caused the movement or crack | How an ISO-based policy generally treats it |
|---|---|
| Normal settling, concrete shrinkage | Excluded (settling and shrinking) |
| Clay soil swelling and shrinking with wet and dry seasons, drought | Excluded (settling, expansion, earth movement) |
| Groundwater pressure or seepage through the foundation | Excluded (water below the surface) |
| Frost heave, freezing and thawing | Excluded |
| Poor grading or compaction, construction defects | Excluded as faulty workmanship; ensuing covered loss may be paid |
| Sudden plumbing leak that undermines soil | Contested; leak damage and tear-out covered, foundation movement depends on form, endorsement and state |
| Sinkhole | Excluded by the standard form; state law or endorsement may cover it |
| Earthquake, landslide | Excluded; needs earthquake coverage (earthquake insurance explained) |
| Vehicle impact, fire, explosion | Covered |
| Abrupt collapse of the building | Covered under the collapse additional coverage when listed causes apply |
Two cracks, two outcomes (hypothetical)
Say one homeowner notices a stair-step crack in a brick wall that widens through a dry summer, with a door that now sticks. An engineer finds that clay soil under one corner of the footing shrank in the drought. Settling, expansion and earth movement all apply, and the claim is denied.
Say a neighbor's slab dips after a pipe under the floor fails. The plumber finds the leak, and the engineer reports that water washed soil out from under the slab. The tear-out to reach the pipe and the resulting water damage to flooring are generally covered, while the pipe is not. Whether the cost of stabilizing the slab is covered depends on the wording of the form or endorsement, and on how the state's courts read it. The cracks look similar. The cause, and the paperwork that proves it, made the difference.
What to do when you find a crack
- Document it now. Date-stamped photos with a ruler, the crack's location and the date you noticed it. Crack monitors or pencil marks with dates show whether it is moving.
- Look for a water source. Check for plumbing leaks, a running toilet, a high water bill, damp spots, downspouts discharging at the foundation. A fast leak caught early keeps the covered cause alive; a slow one that you ignored does not.
- Report it. The policy requires prompt notice, and the clock on the two-year suit limitation in the ISO form runs from the date of loss. For damage that develops over months the date is arguable, so do not wait. See deadlines to sue over a home insurance claim.
- Hire an independent structural or geotechnical engineer, not only a foundation repair company, which has a stake in selling repairs. An engineer can identify the cause, which is what matters for coverage (engineering reports and causation disputes).
- Ask the adjuster in writing which exclusions or provisions the insurer is relying on, and request a copy of any engineer's report.
- Do not start permanent repairs until the insurer has inspected, except protective steps such as stopping a leak.
- If the claim is denied, compare the reason with your policy wording, get a second engineering opinion where the cause is disputed, and read homeowners claim denied: what to do next. Appraisal under the policy usually decides the amount of a loss, not whether the cause is covered (the appraisal clause: settling a claim value dispute).
Buying and prevention
Insurers may ask on an application about past foundation repairs, and some will decline a house with active foundation problems or exclude pre-existing foundation damage. If you are buying, order an inspection and check insurability before closing (check insurability before you buy a house). For prevention, keep water moving away from the house with gutters, downspouts and sloping grade, repair plumbing leaks quickly and keep soil moisture around the foundation reasonably steady where clay soils are common.
Key takeaways
- Settling, soil expansion and shrinkage, earth movement, groundwater pressure and frost damage to foundations are excluded under the ISO HO-3, so most gradual cracking is not covered.
- Foundation damage from a vehicle, fire or explosion is covered, and a sudden plumbing leak may be, depending on your form, endorsement and state.
- An independent engineer's finding on the cause is the single most important document in a foundation claim.
- Report cracks promptly, document them with dated photos, and fix leaks and drainage problems quickly.
- Foundation or slab endorsements exist in some states, such as Texas, and they are worth reading closely for the trigger and the dollar cap.