Introduction
When Quakes
Shake
Your Home
Quake
Statistics
Insurance
|
Earthquake
Insurance
The Basics
- Your basic homeowner's policy
DOES NOT cover earthquake damage.
- Earthquake insurance is
offered by private carriers, although this could change if
federal quake legislation is enacted. (Most likely, any
federal law that addressed insurance would provide some
financial support while keeping the insurance in private
hands).
- This is catastrophic coverage,
so most policies carry a very high deductible -- usually 10
percent of 5 percent of the value of the house. That's
generally the amount of damage that you must pay before the
insurance kicks in.
- Areas are graded on a 1-5
scale for likelihood of quakes, and these zones may be
reflected in insurance rates offered to homeowners in those
areas.
- Wood homes get better rates
than brick ones because they withstand quake stresses better
than brittle brick structures.
- In some areas, you can get an
earthquake endorsement to your homeowner's policy rather
than a separate policy. Ask your agent or state insurance
department for details.
- You should find out your
rights for filing claims before you sign on the
dotted line for earthquake coverage. It's especially
important to know how much time following a quake you have
to file a claim. Although California's Northridge quake
occurred in early 1994, claims are still being settled. This
is because earthquake damage may not be apparent for some
time. Also, as repair costs mount, many homeowners discover
they've exceeded their deductibles and thus are eligible to
file a claim.
About a quarter of the homes in
California have earthquake insurance, with that percentage
higher in areas considered most prone to quakes. Quake insurance
premiums totaled nearly $550 million in 1993, according to A.M.
Best Co. figures cited in an Insurance Information Institute
report. This was more than 13 times the business done in any
other state. (We will show you state number two shortly, though
if you're truly an independent thinker you've already figured it
out).
California seems to have more of
everything than any other state, so why should matters be
different when it comes to insurance problems? Insurers are
still leery about writing earthquake insurance in the state,
though that is changing with the introduction of the California
Earthquake Authority. Find out more about the CEA, and calculate
what you would pay if you bought a policy through this program,
with an interactive
application developed by insure.com.
California is known for having
the nation's most extensive consumer information program for
insurance, so call these folks. (the phone numbers and related
information are at insure.com's
California site.
. . . and everywhere else
All right, the state with the second
highest premiums from earthquake insurance is . . . Missouri,
with $40 million, followed closely by Washington at $39 million.
Because of the New Madrid Fault in the Midwest, lots of
homeowners in several states there are relatively religious
purchases of quake protection. Rates are a lot lower than in
California
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