Everyone always asks me how many of my clients purchase earthquake insurance. About 10% or less of people purchase earthquake insurance in the Seattle metro area. If you’re in a seismically active location, I highly recommend purchasing the coverage. We won’t be able to rely on the government to bail us out with a major quake because of the extensive damage in a concentrated area. The dollar losses can be staggering for insurance companies and the government. I have not witnessed first hand how a claim is paid out on an earthquake policy nor if the government will offer free money but, I have heard that the government is more likely to provide financial aid to those who have earthquake insurance to help with the high deductibles verses those who have no earthquake coverage. This will allow reconstruction faster with less Federal Government funding.
All homeowners policies specifically exclude Earthquake coverage. They will also exclude earth movement, subsidence, mudflow, flood and landslide. The insuring companies want to make sure they have excluded every possible cause of Earth Movement whether it be from tectonic plates shifting, man made earthquakes from construction, ground settlement or the ground just shifting. If you want to purchase a policy for earthquake it is specifically for Earthquake based on the definition and will not include all earth movement perils. Most insurance companies define Earthquake and Earth Movement as follow:
1. “Earthquake” means shaking or trembling of the earth, whether caused by volcanic activity or tectonic processes.
2. “Earth Movement” meaning volcanic eruption, landslide, mudflow, mine subsidence, earth sinking, rising, settling or shifting, unless directly caused by earthquake
All other forms of earth movement are excluded from both the homeowners policy and most “earthquake policies”. Many companies have either stopped offering earthquake insurance all together or have cut back the coverage significantly and increased the deductibles to as high as 25% of the dwelling limit. Most earthquake endorsements on a homeowners policy no longer cover contents or might at a minimal limit of $5,000 or less. Geological maps are sometimes used to exclude from writing coverage in a certain areas due to major faults. Some companies will only offer earthquake coverage on homes built from 1981 and later. It’s the year that the Uniform Building Code required that homes be anchor bolted to the foundation. Each company has it’s own set of restrictions and requirements. If your homeowners insurance Company won’t offer earthquake insurance there are some other companies that will exclusively write earthquake policies subject to their underwriting requirements. If you want to pick up most of the perils excluded on your homeowners policy consider a Difference in Condition policy which includes earthquake among the other perils.
I’d love to have a conversation about what how earthquake insurance will benefit you, depending on your location and the cost. You can reach me at firstname.lastname@example.org.
With Bachelors of Science in Civil Engineering John understands all aspects of construction. After graduating he worked as an industrial Loss Prevention Consultant for Factory Mutual Engineering. A consultant to the largest property insurers in the world prepared him to analyze property loss, construction costs and risk. After Factory Mutual he worked as an Engineer in the private sector for Boeing followed by 20 + years as an insurance broker with Lee insurance Services Inc. John focuses on Home, auto, life, disability, commercial and professional liability insurance. With over 24 years experience in the insurance industry and over 17 years in the engineering industry John has a wide knowledge base to provide the best service to his clientele.