Earthquake Insurance: Protect Your Home against Earthquake Damage

Most people aren't aware that earthquake damage is not covered by the standard homeowner policy. A standard homeowner insurance policy will cover disasters like fire, lightning, hail, explosions, or theft, but excludes damage from earthquakes and floods. Many insurance companies offer a separate policy to cover earthquake damage.

According to statistics 39 states have experienced earthquakes and almost ninety percent of Americans live in areas of seismic activity. Like any natural disaster, the occurrence and magnitude of earthquakes is highly unpredictable, making the necessity of purchasing earthquake insurance a gamble.

 

Earthquakes are more common in certain regions. High magnitude earthquakes can create enormous loss. In such catastrophic situations, Federal Aid offers low interest loans but these loans must still be repaid. After the 1994 Northridge earthquake in California insurers were reluctant to pay earthquake claims fearing another earthquake would bankrupt the industry.

 

Most homeowners are provided with information on the seismic activity in the area. Lenders may require homeowners in high-risk areas to purchase an earthquake insurance policy. Those with homes in lower risk areas might weigh the benefits against the cost and conditions of the policy.

Most earthquake insurance policies carry a high deductible of fifteen percent although some insurance companies now offer a ten percent deductible. For a $200,000 dwelling the homeowner must pay $15,000 before the insurance will begin paying for damages. A standard earthquake policy will cover only damages to the primary structure.

 

Other structures such as pools, sheds, and gazebos are not covered under the policy. A standard policy will also cover up to $5,000 in personal property and allow claimants $1,500 for loss of use. This provision allows the policyholder to find a temporary residence if the property is uninhabitable.

Insurance companies may also provide other extended options for earthquake insurance. Besides covering the cost to repair or replace the damaged primary structure it is important to find out what other options are covered. Each insurance company has certain criteria for quoting earthquake insurance rates. For instance, homes in high-risk earthquake areas and older homes that were built before certain earthquake standards were enforced will have a higher rate.

 

When looking for earthquake insurance, compare companies and their policies for the policy the best meets your needs. Make sure you purchase enough insurance to cover the replacement or repair of your home and personal possessions.