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Earthquake Coverage | Residential and Commercial Property Insurance

By Dez Duran-Lamanilao

Image source: IBHS

While most of the earthquakes that happen in the US yearly are relatively small, owners of residential and commercial properties that are near geological fault lines or are quake-prone should consider buying a separate coverage for earthquake protection. According to the US Geological Survey (USGS), the states that have the highest risk of experiencing a damaging earthquake in the next 50 years include California, Alaska, Illinois, Utah, Washington, and Hawaii, among many others.

*Even though Alabama is not one of those states, we realize that you may have a vacation home or may possibly relocate to one of these locations in the future. We want you to have the best information possible on type of insurance offered throughout the US.

Deductibles for earthquake insurance may range between two percent and by as much as 20 percent of the building’s value, depending on several factors, including location, age, cost to rebuild the building or home, and the property’s condition. From an overall perspective, earthquake insurance can be quite expensive. You can either opt to buy a separate policy or via an endorsement, which means a written change to your existing policy to add a coverage.

Generally, an earthquake policy will cover repairs needed due to damage. This includes your inventory, or depending on the extent of coverage, may even include business losses arising from the damage. It also covers costs related to debris removal. In some cases, an additional living allowance is provided so the homeowner can find another place to stay while repairs are ongoing. Exclusions to a policy include fire, land, vehicles, or pre-existing damage.

What are the risks an earthquake poses to your property? They may include:

  • Partial or total building destruction
  • Collapse of one or more areas of the property
  • Structural damage
  • Explosions
  • Gas leaks which may lead to fires
  • Landslides
  • Flash floods

The National Association of Insurance Commissioners (NAIC) suggests the following tips for earthquake insurance:

  • Create a detailed inventory of each valuable and take pictures/videos for better documentation.
  • Review and update your inventory regularly especially if you have recently purchased expensive items.
  • If you are filing a claim, cooperate fully with the investigation so the adjuster can make accurate evaluations.
  • Make sure that a qualified professional inspects your home after a quake so both cosmetic and structural damage can be verified.
  • If there are disagreements with your insurer, try to resolve it in a more peaceful manner. Experts recommend bringing your contractor during discussions to get professional advice.

If your property is along the Gulf Coast and you want to know the current insurance conditions in your area, you may get in touch with an agency that specializes in writing high-risk coastal properties so you can take the first steps in protecting your property from earthquakes.