Earthquake Insurance
What does earthquake insurance cover?
Once again, the answer depends on the type of policy purchased. At a minimum, you should look for some basic coverage types to protect your finances in the event that an earthquake hits in your house:
Property Damage
First and foremost, the point of earthquake insurance is to provide you with a way to pay for damages to your home after an earthquake. If you do buy a policy, you should determine the amount of coverage necessary to pay for repairing or rebuilding your home.
Personal Items
In addition to your structure being protected from damage with an earthquake policy, your personal items are also protected. In many cases, you will be required to take out coverage for at least 10% of the cost of your dwelling to cover your personal property.
Temporary Housing and Extras
If your home is badly damaged or destroyed, you will need money for living expenses while your home is being repaired. This coverage varies widely depending on the type of policy purchased.
What is the cost?
Earthquake rates are calculated differently by each insurance company and depend on a number of different rating factors:
It comes down to one question; how much of your home investment are you willing to risk? Ideally, the amount purchased will be sufficient to cover the cost of rebuilding your home and replacing damaged possessions. Note that the amount of dwelling coverage should be based on the replacement cost of your home, not its market value.
At Premier One we offer both stand-alone earthquake policies and earthquake insurance as part of a homeowners package. We offer the most competitive earthquake insurance products in the industry from a choice of different insurance companies. We can help you choose the product that best fits your particular needs.
Should you buy Earthquake Insurance?
There is no clear cut answer. One thing you should know is that if you don't have an earthquake policy, you don't have coverage. A basic homeowners policy does not cover earthquake damage. A few facts to consider:
- Earthquakes have occurred in 39 states since 1900, and about 90 percent of Americans live in areas considered seismically active. Yet only a small percentage of people purchase earthquake insurance.
- Even in California, where earthquake fears are a daily fact of life, only about 12 percent of homeowners have earthquake insurance, according to the California Earthquake Authority (CEA), down from 30 percent in 1996 when the state legislature created the CEA.
- According to the U.S. Geological Survey, there is a 99 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike California area the next 30 years. (Recall that the Northridge quake of 1994 was a 6.7 magnitude, and that quake killed 57 people and caused $20 billion worth of damage.)
What does earthquake insurance cover?
Once again, the answer depends on the type of policy purchased. At a minimum, you should look for some basic coverage types to protect your finances in the event that an earthquake hits in your house:
Property Damage
First and foremost, the point of earthquake insurance is to provide you with a way to pay for damages to your home after an earthquake. If you do buy a policy, you should determine the amount of coverage necessary to pay for repairing or rebuilding your home.
Personal Items
In addition to your structure being protected from damage with an earthquake policy, your personal items are also protected. In many cases, you will be required to take out coverage for at least 10% of the cost of your dwelling to cover your personal property.
Temporary Housing and Extras
If your home is badly damaged or destroyed, you will need money for living expenses while your home is being repaired. This coverage varies widely depending on the type of policy purchased.
What is the cost?
Earthquake rates are calculated differently by each insurance company and depend on a number of different rating factors:
- Location of your home. Areas are graded on a scale of 1 to 5 for likelihood of quakes, and this is reflected in earthquake insurance rates. Premiums are also based on the nature of the soil and your house's proximity to recognized fault lines.
- Age and type of home. Generally older homes are more expensive to insure than new homes. Also, the construction type (wood, brick, stucco, etc) may cost more or less depending on how they handle quake stress.
- The CEA . The CEA is a state-sponsored private-public partnership providing earthquake insurance to California homeowners, renters and condominium owners. The average rate for a policy purchased with the California Earthquake Authority is $722 per year.The CEA Web site has a tool to calculate your estimated annual earthquake premium (www.earthquake authority.com).
- A note about deductibles: Because earthquake insurance is a type of catastrophic coverage, most policies carry a high deductible - anywhere from 2 to 20 percent of your replacement coverage limit.
It comes down to one question; how much of your home investment are you willing to risk? Ideally, the amount purchased will be sufficient to cover the cost of rebuilding your home and replacing damaged possessions. Note that the amount of dwelling coverage should be based on the replacement cost of your home, not its market value.
At Premier One we offer both stand-alone earthquake policies and earthquake insurance as part of a homeowners package. We offer the most competitive earthquake insurance products in the industry from a choice of different insurance companies. We can help you choose the product that best fits your particular needs.
