Surprisingly, most homeowners who live in an active earthquake region do not have earthquake insurance along with their regular homeowners policy. But when an earthquake hits you can bet that insurance companies are flooded with phone calls from homeowners suddenly aware of the benefits of the coverage.
Most homeowners insurance policies have exclusions for earthquake damage. Especially in regions of the country where active faults exist. Insurance companies like to stack the proverbial deck in their favor as much as possible, so anyplace there is a possible earthquake will likely not include earthquake coverage on a basic policy.
So, what can you do if you own a home in earthquake-prone territory? There are many things to consider about earthquake insurance in addition to a regular homeowners policy.
Premium cost – Earthquake insurance can be just as, and sometimes even more than, your regular homeowners policy. You can bet that high risk areas like Seattle or San Francisco are big red flags to insurance companies. If you want to protect your financial investment in your home from earthquake damage or destruction in one of these places, expect to pay for it.
Deductible – Also, insurance companies will further protect their risk involvement by establishing high deductibles. It’s not surprising to see deductibles of $50,000 to even $75,000 on earthquake policies. That means if there is damage from an earthquake that is less than your high deductible amount, you are still responsible for the total cost.
Retrofitting – One way to protect against earthquake damage and save on earthquake insurance premiums is to retrofit an older home, or buy a newer home constructed with earthquake resistant materials and architecture. Retrofitting means adding elements to match basic seismic standards. Flexible piping, sheer panels, and bolting the foundation are examples of earthquake retrofitting.
Earthquake insurance is expensive. However, if you live in earthquake territory, have considerable equity in your home, and you cannot afford to rebuild your home on your own, an earthquake policy may be sound financial advice.
