Does Homeowners Insurance Cover Earthquakes?
Earthquake Insurance: Does your standard Homeowners Insurance Cover Earthquakes?
If you were like me and were sitting on the couch Valentine’s Day Night in South Carolina or Georgia around 10:20 pm, you probably felt your entire house shake. And if you were like me, you probably wondered, “What just happened? Was that a freight train that all of the sudden found tracks right outside my house or an airplane flying too low?” Come to find out, it was a 4.1 magnitude earthquake with the epicenter near Edgefield, SC! Now you are probably not like me because the next thing I thought was, “Am I covered under my homeowners’ policy if there are any damages?”
Earthquake damages are not covered under most standard homeowners insurance policies, but additional coverage can be purchased in most states.
Earthquake insurance usually covers damages to the insured residence and/or its contents that are caused by the earthquake.
However, earthquake-related damages not caused by the actual earthquake but are a by-product, such as a tidal wave, may not be covered. Earthquake Insurance premium is based on the probability of an earthquake occurring in your area and the characteristics of the insured structure.
The deductible is usually a factor of your home’s insured value, usually around 10%. So if you had a $150,000 home, your deductible would be $15,000. That may sound ridiculously high, but think about all the damage a 7.3 magnitude earthquake, which was the magnitude of the 1886 Charleston Earthquake, could do. A ten percent deductible doesn’t sound so bad when you look at it that way. That being said, the coverage is surprisingly affordable in our area of the country. I’ve seen between five and ten percent of the annual policy premium.
Bottom line, check your homeowners policy to see if you are one of the lucky ones where earthquake insurance is built into your policy form. If you are not so lucky, you can always inquire with your agent about adding the coverage. It is should not be that expensive. By purchasing the coverage, you gain peace of mind that you are protected if another larger earthquake were to hit our area, which history indicates that it will!