Homeowners’ policies and earthquakes
Most homeowner, mobile home, condominium, and renter insurance policies do not cover earthquake damage. Earthquake coverage must be purchased separately.
Need for Earthquake insurance
Since many homeowners’ biggest investment is their home, earthquake insurance may help protect that investment.
Oregonians with Earthquake Insurance
About 20 percent of Oregonians have this coverage.
Earthquake Risk in Oregon
Experts have recorded more than 6,000 earthquakes in Oregon, most too small to feel, since 1841. The greatest seismic activity in the past two decades occurred in the Portland metro area and the Klamath Falls area. The Portland metropolitan region has been shaken by 17 earthquakes of an estimated magnitude of four and greater, with damaging earthquakes in 1877 (magnitude 5.3), 1962 (magnitude 5.2), and 1993 (a magnitude 5.6 earthquake that caused over $30 million in damage). Records also indicate that earthquakes in the Puget Sound region, such as the magnitude 7.1 event in 1949 near Olympia, Washington, and the magnitude 6.5 event in 1965 located between Seattle and Tacoma, caused damage in Portland.
Coverage
Earthquake insurance covers direct physical loss to your property. Earthquake is normally defined in your policy as “shaking or trembling of the earth, caused by volcanic activity, tectonic processes, or any other cause.” Most policies state that any shocks that occur within a 72-hour period constitute a single earthquake. Earthquake insurance does not cover a loss caused by landslides, erosion, tsunami, or volcanic eruption, even if an earthquake causes them to happen. Coastal residents can get flood insurance through the National Flood Insurance Program that will protect against a tsunami. Contact your La Pine Insurance Center agent for assistance with purchasing flood and/or earthquake insurance.
Earthquake deductibles
A deductible is the amount you pay before your insurance kicks in. The earthquake insurance deductible typically is a percentage of the insured amount. In other words, the deductible is a percentage of the amount of coverage, not a percentage of the amount of loss. Most insurers in Oregon sell coverage with 10 percent or 15 percent deductibles. A higher deductible may qualify you for discounts.
Examples:
- A homeowner with $300,000 in dwelling coverage and a 10 percent deductible would pay $30,000 before insurance pays.
- The same homeowner with $150,000 in personal property coverage (contents) would have a separate deductible of $15,000.
Living Expenses
If earthquake damage to your home is so severe that you must move out, coverage for additional living expense is only available if you have earthquake coverage. Normally, this coverage is provided with no dollar limit and no deductible. Additional living expense normally extends for up to one year after a loss to pay extra expenses for moving and renting other space while your home is repaired. Check with your agent when purchasing earthquake coverage to make sure that the additional living expense coverage extends to earthquake damage.
Cost of Earthquake insurance
Costs vary widely based on the type of house, its age, the nature of the soil, and proximity to known fault lines. Older homes cost more to insure than newer homes. In some cases, older homes may have to be retrofitted to qualify for earthquake coverage. Coverage for wood-frame homes costs less than coverage for brick homes, as wood-frame homes “flex” and are subject to less damage in case of an earthquake. A 2009 Survey of the Portland market indicated that earthquake coverage for a wood-frame home insured for $300,000 with $150,000 in personal property coverage could be purchased for $200 to $300 annually. The cost for similar coverage on a brick or masonry home would be higher.
When to Buy
Most insurers place a moratorium on selling earthquake coverage for a period of time after any significant seismic event. So, be sure to get your earthquake coverage insurance before an earthquake. For an earthquake quote, please call your La Pine Insurance Center agent .
Tips for Buying Earthquake Insurance
If you live in a quake-prone region and you can afford it, the best way to protect your investment in your home is to retrofit and buy earthquake insurance.
The decision whether or not to buy earthquake insurance is an individual, financial decision. Key factors to research and consider are:
- The financial strength of the companies that will sell it to you.
- The features and pricing of their policies.
- The amount of equity you have in your home.
- Your proximity to a fault zone, and the age and style of construction of your home and foundation.
If you decide to buy earthquake insurance, shop for limits that are adequate to fully replace your property, engineering costs, required improvements to comply with building codes, temporary living expenses, outbuildings, etc. Policies with 10% as opposed to the standard 15% deductible are now available but of course they're more expensive. The price and high deductibles for earthquake policies has led many people to avoid buying the product, but remember; if you live in a quake-prone region, going "bare" with no insurance means you pay 100% of the deductible and you'll bear the entire risk yourself.
Don't assume that FEMA, the SBA and/or private charities will bail you out with funds to rebuild after a major disaster. FEMA has very limited funds and strict eligibility criteria. SBA loans are modest and must be repaid. Private charities are being severely stretched by the everincreasing demand for their services.
If you need assistance in purchasing earthquake insurance for your home, please call an agent at La Pine Insurance Center.
Additional information
Oregon Department of Geology and Mineral Industries DOGAMI): http://www.oregongeology.org/sub/earthquakes/earthquakehome.htm
DOGAMI map of earthquakes in Oregon since 1841: http://www.oregongeology.org/sub/earthquakes/EqEpicentermap.htm
Federal Emergency Management Agency:
http://www.fema.gov/hazard/earthquake/index.shtm
U.S. Geological Survey (historical earthquakes, interesting facts): http://earthquake.usgs.gov/learning/faq.php
NOTE: These definitions are not applicable in all states or for all products. This is not an insurance contract. Other terms, conditions, and exclusions apply. Please read your policy for full details about the coverage’s. These definitions do not alter or modify the terms of any insurance contract. If there is any conflict between these definitions and the provisions of the applicable insurance policy, the terms of the policy control. |
