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Earthquake Insurance
Should you buy earthquake insurance?
Insurance Commissioner Mike Kreidler advises consumers to consider their
own circumstances and needs when deciding if earthquake insurance is
a good buy. There isn’t one answer for everyone, but for most
people their home is their major asset. Protecting it just makes good
sense.
An earthquake endorsement generally excludes damages or losses from floods and tidal waves – even when caused or compounded by an earthquake. However, loss caused by landslide, settlement, mudflow and the rising, sinking and contracting of earth may be covered if the damage resulted from an earthquake.
Earthquake insurance is catastrophe insurance
Unlike most homeowner or tenant policies, earthquake insurance primarily
covers major losses. It normally is sold with deductibles equaling 10
to 25 percent of the structure’s policy limit. Recently, the industry
trend has been to raise deductibles.
This limit works much like the deductibles on your auto insurance. The result is that the insurance pays only for damages that exceed the deductible. However, unlike car insurance, some earthquake policies treat contents and structure separately. This means the deductible amount applies separately to the:
- Total amount of the loss for contents
- Total amount of the loss for the structure
- Total amount of the loss for unattached structures like garages, sheds, driveways or retaining walls
Not all policies are alike. You should compare the coverage differences between companies to get the coverage that best meets your needs.