If I don’t live along the fault line in California, Oregon and Washington, why would I need to consider earthquake insurance? That is a very good question so let’s share some facts about earthquakes. Although the west coast is an active earthquake area in the U.S., other hotspots are known for their activity. Nevada, Utah, and Wyoming, also in the west, but moving east there are known hotspots in Illinois, Missouri, Arkansas, Tennessee, Kentucky, South Carolina and much of Hawaii and Alaska.
Earthquakes pose a risk to 75 million Americans in 39 states. While damage is usually minimal, each episode of earth movement leaves a home or business owner wondering “what about the next time?”
Earthquakes are dangerous both physically and financially. Homeowner’s and business owner’s insurance does not include this valuable coverage.
Earthquake coverage is offered as a stand-alone policy similar to how flood coverage is offered. Although California is well known for earthquakes, currently only about 12% of homeowners there carry this coverage. In the other states previously listed, the percentage drops even more significantly. Homeowner’s have the mindset that since most earthquakes result in little property damage; it’s not worth the expenditure. Anyone who has watched their home or business crumble to the ground would certainly disagree with this line of thinking.
The earthquake insurance policy covers damage to the building and the contents inside. However the resulting damage from an earthquake may not always be covered. For example, when the earthquake causes flooding the damage from the flood is not covered. Every policy will cover some damage but not others, so know what you’re getting before committing to the purchase. The premiums are based primarily on where your home or building is located and how the structure is built also comes into play. A homeowner in a wood frame home built near a fault line is going to pay much more than the homeowner who lives in a masonry built home a greater distance from the fault line. A buyer can elect a higher deductible (the amount you pay out of pocket) to help reduce the premium. Just like flood maps, the home or business owner can get consult a seismic-hazard map to determine how hazardous an area may be.