Earthquake insurance in a necessilty in the quake prone zones because earthquakes are anything but predictable. The above ground threats pale in comparison to earthquakes. If you are based near the Mississippi river on a seismic plain, you probably live in perpetual fear. What then, is the best way to protect your home?
Get the Earthquake Coverage
Also known as the catastrophic coverage, this is purchased as an endorsement to the standard homeowners policy. It is never included in a standard homeowners policy. The deductible in this case, is quite high (normally 10% of the home's value) and the costs of earthquake insurance vary from company to company, but depends largely on your location.
How does it work?
Areas are graded by insurance companies on a scale of 1-5 and used to calculate your risk. Your house may also be used to calculate your premium.
Once purchased, the endorsement imbeds itself in your policy as an added peril. It then covers all losses attributed to a quake. Many property owners use the earthquake insurance to help defray the expense of costly post quake repairs. In some states, the insurers of residential property legally required to offer earthquake coverage for the peril of earthquake.
The mandatory earthquake offer must:
You have 30 days from the date of mailing to accept the offer of earthquake coverage. Every offer of earthquake insurance must cover your home, your personal belongings (the value of this should not be less than $5,000 or 10% of the insured loss of residence), and for any additional expenses incurred if you have to move out of your home. This can be up to a figure of at least $1,500.
Know the fine print
Insurance companies are required to offer earthquake coverage even if your property does not meet current Building Code and Health and Safety Code requirements. However, your insurer may charge additional premium and/or an increased earthquake deductible if this is the case with your dwelling.
Also, your insurance company must disclose any available discounts (such as retrofitting) for earthquake hazard reduction to your property in writing.
Be aware that there are also the Stand-alone policies offered by a few specialty insurance companies who do not require you to purchase your homeowners insurance from them in order to offer you earthquake coverage.
Earthquakes pay you a visit, unannounced. Do have your earthquake coverage ready before it hits you, not when it is at your doorstep?