Understanding Earthquake Insurance
Most damage that would result from an earthquake will not be covered by standard homeowners insurance. This is why good earthquake insurance is so important. It is a very specialized form of policy protection that homeowners can purchase to protect them from property loss or other damage that is due to seismic activity. As certain areas are more prone to earthquakes than others, coverage is often not available in some regions of the country. The cost of this coverage’s premium payment is ascertained directly by where the insured property is located and how often seismic activity occurs there. Earthquake coverage can frequently be added onto one’s current property insurance policy or it can be bought separately. This coverage is also available for renters to obtain.
What is Covered?
Earthquake insurance will generally offer three different kinds of protection:
• The insured home (and potentially other structures)
• The personal property within the insured home
• Consequential living expenses that might be incurred if unable to live in a damaged structure.
Earthquake policies will normally have separate deductibles for the home and personal property components of the coverage. Depending on the insurance provider, there might be an additional deductible for the living expenses coverage.
Making a Claim
Earthquake insurance is usually provided based on a home’s actual value. For example, a $500,000 home can be protected up to its full value with the necessary deductible being between 10 and 20 percent of that amount. For instance, if the claim is for the full $500,000 for earthquake damage with the 20 percent deductible, the homeowner will need to pony up pays $100,000, with the earthquake insurer paying the remaining balance of $400,000.
Wood frame homes will more often get through an earthquake better than would a brick home. If one sees visible damage to the home in the aftermath of a quake, he or she should contact the insurer immediately. Even should there be no visible damage, it is a good idea to have the home inspected to be sure all is well.
Those who reside in a quake-prone area such as certain parts of California can purchase this insurance from several insurance providers. On the other hand, living in area that is relatively free of seismic activity will probably mean one will not require coverage. Living on the west coast, Hawaii or other active areas are where insurance is a smart idea with coverage for 365 days a year since no one knows when a quake might strike.