Earthquakes can and do happen in all parts of the United States. While most cause little or no damage, some cause catastrophic destruction. A standard homeowners insurance policy won’t cover earthquake damage, but earthquake insurance can.
What Earthquake Insurance Does and Doesn’t Cover
Earthquake insurance will pay to repair or rebuild your house if it gets damaged or destroyed by an earthquake. It will also pay to replace personal items that get damaged or destroyed and will cover temporary living expenses while your home is being repaired or rebuilt.
Many houses that were constructed decades ago don’t comply with current building codes. If your home gets damaged or destroyed, it will have to be repaired or rebuilt in accordance with current rules. You may be able to include building code upgrade coverage to pay for those additional costs.
Emergency repairs coverage is another option. It will pay for immediate repairs after an earthquake to prevent further damage to your house.
In some cases, a different type of insurance may apply. For instance, if an earthquake causes a fire, that will fall under your standard homeowners insurance policy. If an earthquake damages your car, your auto insurance policy’s comprehensive coverage will pay for repairs.
Earthquake Insurance Can Be Expensive and May Have a High Deductible
Premiums for earthquake insurance vary depending on how often earthquakes occur in a particular area. If your region has frequent earthquakes, you will most likely pay higher premiums than someone who lives in an area that rarely experiences earthquakes.
Rates will also be based on the likelihood that your home would be damaged or destroyed by an earthquake and how much it would cost to repair or rebuild it. Premiums for houses made of stone or brick tend to be higher because those types of homes are more likely to be damaged than frame houses. The condition of the soil and slope of the land can also influence rates. You may get a discount if your home was built or retrofitted to reduce the risk of earthquake damage.
The deductible on an earthquake insurance policy is generally a percentage of the coverage limit. That may be tens of thousands of dollars.
Should You Buy Earthquake Insurance?
To figure out whether you should purchase earthquake insurance, think about how often earthquakes occur where you live. If you’re in a high-risk area and have a high-value home that wasn’t constructed to withstand an earthquake, buying insurance may be a good idea.
Even if you have earthquake insurance, you might not be able to take advantage of it because policies have high deductibles and most earthquakes cause minimal damage. The high premiums may not be worth it, especially if you live in a low-risk area.
If you decide to purchase earthquake insurance, you can purchase coverage as a homeowners insurance endorsement or as a stand-alone earthquake insurance policy. Contact your homeowners insurance company or an insurer that specializes in earthquake coverage.
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