Blog Author's Note: This article does not necessarily reflect Keller Williams' or my own point of view. But Mel brings up some key points on earthquake insurance that I thought would benefit most homeowners.
EARTHQUAKE INSURANCE
By Mel Rodriguez, CT Lowndes & Co.
The first 2 months of 2010 have featured two major earthquakes, in
Does my home insurance policy automatically include earthquake insurance?
Generally speaking, the answer is no. The typical homeowners policy does not include earthquake insurance. Damage done by an earthquake is specifically excluded.
Some condominium unit owners (HO-6) policies do include earthquake insurance but you must refer to your particular policy to see if an earthquake endorsement form has been attached to the policy.
Does my auto insurance policy automatically include earthquake insurance?
Yes, automobile insurance policies provide earthquake coverage as long as comprehensive (other than collision) insurance applies to the damaged vehicle.
Does a commercial insurance policy for my business automatically include earthquake insurance?
In almost all cases, the answer is no. Damage caused by an earthquake is specifically excluded. The exception is if you have a Difference in Conditions (DIC) policy. Most DIC policies do include earthquake insurance.
How can I obtain earthquake insurance?
Many insurance companies allow earthquake insurance to be added to the homeowners or commercial policy by endorsement, with an additional charge for the insurance. You should contact your company to see if they offer earthquake insurance.
There are several insurance companies that issue a stand alone earthquake policy. In other words, they do not require you to have any other insurance policies with them. These companies are usually ones like Lloyds of London.
What is the usual deductible for earthquake insurance?
The vast majority of insurance companies offer earthquake insurance with a percentage deductible, ranging form 2% to 15% or higher. This percent is a percentage of the amount of insurance on the building. For example, a policy insuring a home for $500,000 with a 5% earthquake deductible has a deductible in the amount of $25,000.
One caution here. Read the endorsement providing earthquake coverage very carefully as many companies make the deductible apply separately to building and contents. Thus in the above example, if your homeowners policy included $250,000 contents coverage, a second deductible of $12,500 would also apply to the contents portion of the claim!
At least one Lloyds of London market offers earthquake insurance with a flat $1,000 deductible that applies separately to building and contents..
Are there any other oddities about earthquake insurance about which I should be aware?
Yes, a few companies will provide earthquake for a brick veneer structure but their endorsement states that the bricks are not covered! In the aftermath of an earthquake, you may find yourself with a pile of bricks around your home and no insurance coverage! Be sure to read your policy!! Some companies will allow you to buy back the coverage for the bricks.
Is an earthquake a real threat in the
A major Earthquake struck
Is earthquake insurance expensive?
The
Is damage done by an aftershock considered a separate claim?
If the aftershock occurs within a certain time frame after the earthquake, damage done by the aftershock is considered the same claim as the original earthquake. Most companies use a time period of 168 hours, or 7 days.
Is tsunami insurance included in earthquake insurance?
No, you must purchase a flood insurance policy through the National Flood Insurance program in order to have coverage for the “big wave”.
Mel Rodriguez is a Property & Casualty Insurance Broker with CT Lowndes and Co. You can reach him by email at mrodriguez@ctlowndes.com
Please contact us if you have any questions or comments.