Earthquake Insurance

by Anna Glendenning | More from this Blogger

14 Jul 2006 09:43 AM

The standard homeowner insurance policy doesn't cover earth movement claims. An earthquake might be the first thing that comes to mind when someone thinks about earth movement, but earth movement includes, landslides, mudslides, mudflow, sinkholes or other movement of the ground involving sinking, rising or shifting of the earth. In most homeowner and renter policies earth movement is an excluded loss and means claims aren't covered unless the policy holder adds an endorsement for earthquake coverage. It's up to the consumers to decide if their own situation requires an earthquake insurance endorsement. Earthquake insurance usually excludes any losses caused by floods or tidal waves caused by or made worse by an earthquake.

An earthquake endorsement is considered catastrophe insurance protection and will cover major losses. There is usually a different deductible for earthquake coverage.

Most insurance companies issue earthquake insurance with 10 to 25 percent of the structure's policy limit as the deductible. So for example:

• If your home structure is insured for $100, 00.00
• The policy has 10% earthquake deductible
• The policy holder pays the first $10,000.00 of damages
• Then the earthquake insurance endorsement pays for damages that exceed the deductible.

Not all policies are the same and some states have more restricted underwriting. If you are interested in earthquake coverage it's important to compare the coverage differences between companies to get the coverage that best meets the risks you want to insure.

Insurance companies often require inspections of the property before they will issue a policy. In some states and with many insurance companies the home must be bolted to its foundation, which wasn't part of standard building codes until the 1960s.

Insurance companies may also consider:

• The location and bracing of interior walls.
• Strapping guards on fixtures like water heaters.
• The way shelves are mounted on walls.

Some homes require few things to make them earthquake insurable. Older homes may be expensive and require a contractor to retro-fit and make the structure insurable for an earthquake risk. Requirements will also vary from insurance company to another.

Earthquake insurance endorsements are usually not available immediately after an earthquake within an area. When a certain region has systemic activity insurance companies will declare a moratorium on new sales of earthquake coverage. Moratoriums may last several days

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earthquake, homeowner, insurance