Why Earthquake Insurance? Earthquakes can do a great deal of damage to a home and the personal possessions in it. A severe earthquake can completely destroy a home and its contents. Such a loss, if uninsured, could devastate most individuals and their families.
Excluded from Standard Policies – In most homeowners, renters, and condominium unit owner’s policies there is a specific exclusion for loss caused by ‘earth movement,’ a term that includes earthquakes. To cover this, a basic policy must be endorsed to include earth movement, for which the insured pays an additional premium. As an alternative, a separate earthquake policy may be purchased.
Earth movement is generally defined as “earthquake, including land shockwaves or tremors before, during or after a volcanic eruption, landslide, mine subsidence, mudflow, earth sinking, rising or shifting.” The term earthquake generally means a “vibration generating rupture event caused by displacement within the earth’s crust through release of strain associated with tectonic processes and includes effects such as ground shaking, liquefaction, seismically-induced land sliding and damaging amplification of ground motion.
Adding Other Coverage – In many locations, an insured can add an earth movement endorsement to a basic policy. The endorsement usually covers only structures and/or personal property, and does not cover damage to the land itself. It usually excludes flood or tidal waves generated by earth movement.
The earth movement endorsement is subject to a percentage deductible (generally 10% to 25% of the value of the property insured), compared with the usual flat dollar deductible amount. To understand this different type of deductible, suppose a person’s home is insured for 200,000 and its contents insured for $60,000. If there is a total loss from an earthquake and the policy has a 10% deductible, the individual would face a deductible of $20,000 on the value of the home and $6,000 on the value of the contents.
Seek Professional Guidance – Insurance agents and brokers, insurance counselors, and other trained financial consultants can help provide answers to detailed questions about a particular policy. These professionals are also helpful in selecting the right policy and the appropriate amount of coverage.
