What do San Diego County residents have to know about Earthquake Insurance Policies, Risks and Costs?

Quality Claims Management views Earthquake coverage as catastrophic insurance. You will only need it if we have a really big earthquake. However, depending on where you live in San Diego and how much you have invested in your home, you may opt to get coverage. Here is what you need to know.

First, most standard homeowners, mobile home owners, condominium, and renter’s insurance policies DO NOT cover earthquake damage. Similar to flood insurance, earthquake insurance usually must be purchased separately.

However, fire insurance is part of most typical homeowners insurance policies. This means your home insurance policy may cover a significant part of the damage if your home burns down or is damaged in a fire that is caused by an earthquake.

Much of the damage that often arises from an earthquake happens after the ground stops shaking. Gas lines that may have ruptured and start leaking can catch on fire and burn your home to the ground. In San Diego County, it is also very possible that your home may be consumed in a wildfire sparked caused by earthquake motion many miles away. A power line may have collapsed. A home may have caught fire because of the quake and flames traveled many miles through brush to your home.

Another major factor is water damage. Quakes often break pipes. Even small quakes can crack a water or sewer pipe that floods your home and can cause extensive damage to your floors, rugs, furniture – even to the structure of your home.

If your homeowner’s insurance includes fire and flood damage, you should be covered for this “earthquake” damage – even if you don’t have earthquake insurance.

Another danger from earthquakes is landslides. You may or may not be covered for this. You need to check your homeowner insurance policy to make sure of your coverage for both landslide and fires. If your home does burn down, are you fully covered? Will you be able to replace your home and all of your belongings.

Check our other articles about homeowners insurance for details about coverages and what you need to know.

Where do you get Earthquake Insurance?

The law requires insurers that sell residential property insurance within the state of California to offer earthquake coverage to their policyholders. Most of these California earthquake insurance policies are backed and administered by a government organization known as CEA – the California Earthquake Authority.

Even though most earthquake insurance policies are sold by the state-run insurance pool, a few private companies also sell earthquake coverage. In order to provide earthquake coverage, insurance companies can become a CEA participating insurance company and offer the CEA’s residential earthquake policies or they can manage the risk themselves. To date, companies that sell over two-thirds of the residential property insurance in the state have opted to become CEA participating companies.

According to the CEA website, the CEA homeowners policy is designed to help get you back into your home after an earthquake. The CEA base-limits policy for homeowners includes:

Dwelling coverage – The coverage limit is the insured value of your home stated on your companion homeowner policy.

* Personal Property coverage – $5,000

* Additional Living Expense/Loss of Use coverage – $1,500

* You may select either a 10% or 15% deductible on your Dwelling coverage, and CEA’s increased-limit options allow you to increase Personal Property coverage to as much as $100,000 and Additional Living Expense/Loss of Use coverage to as much as $15,000.

Residential property insurance includes coverage for homeowners, condominium owners, mobile home owners, and renters.

Earthquake insurance is not intended for smaller losses as you must have enough damage to surpass your deductible. Even though deductibles are generally 10-15% of the amount of the Coverage A limits, it can be a little confusing to calculate the actual deductible amount since there are several factors that go into the formula.

How will your home handle an earthquake – Do you need Earthquake Insurance

- where in San Diego County do you live?

- what is under your house (rock, sand, fill, etc?)

- how is your home constructed – is it up to code and why that matters for your coverage

Age and type of construction contribute to how a residential structure reacts during an earthquake. Based on the scientific and engineering research, the CEA premiums reflect the following rating factors:

- In general, houses built on a slab perform better than those built on a raised foundation.

- One-story houses are less vulnerable to earthquake shaking than multi-story houses.

- Unreinforced masonry structures are more susceptible to damage than those of wood-frame construction.

- Houses of a certain age are not as strongly constructed as others.

The type of home you have affects your risk. One-story homes that are “tied together” — with the roof bolted to the walls, and the walls to the foundation — tend to survive earthquakes and windstorms better than multistory homes that aren’t. As you would expect, houses with big openings, such as plate-glass windows or large garage doors, fare worse than ones without those features.

In addition, your home can be substantially fortified with some special construction measures. For many, this can be a better investment than buying earthquake insurance.

The Institute for Business and Home Safety has a Fortified For Safer Living” program that specifies building techniques that can help homes better withstand disaster.

Other California Earthquake Insurance Factors

No Known Loss Letter Requirement

In areas that have been previously affected by an earthquake or other catastrophic event, an insurer may require a “No Known Loss Letter” with all requests for earthquake insurance or to add earthquake coverage to an existing policy. These kind of letters letter confirms that no known losses or damages have already occurred to the requested coverage location(s).

DIC Policy

DIC (Difference in Conditions) insurance provides coverage designed to close specific gaps in standard insurance policies. It allows coverage to be customized to extend to such exposures as water damage, flood, collapse, earthquake, landslide, etc., according to the insured’s needs. DIC coverage may be provided by means of a separate insurance policy or it may be added by endorsement to the basic policy.

Is Earthquake Insurance Right For You? How Much Equity Do You Have In Your Home?

As mentioned earlier, we view Earthquake coverage as catastrophic insurance. You will only need it if we have a really big earthquake. The more equity you have in your home, the more you need insurance.

According to UnitedPolicyHolders, a non-profit organization that fights for the rights of insurance consumers and educates individuals and businesses on how to get fair treatment, “a generally accepted rule of thumb is that you should not risk more than 10 percent of your liquid assets. A large earthquake could mean 10 to 100 percent of your home’s structure could be damaged or destroyed, up to 20 percent of your belongings could be damaged, and/or you may need to come up with $3,000 a month for temporary rent and relocation costs.”

In San Diego, we get lots of smaller quakes on a regular basis. These are reminders to YOU to review your current coverages to be sure that you are adequately insured. Is your current homeowner’s insurance up to date? Will it pay to rebuild your home to current building codes? Do you have additional coverage and riders for all the new stuff yiou may have acquired since you first bought your insurance policy?

Remember, it is far more likely you will have pipes break or fires start from the smaller earthquakes. If either of these happen, you should have coverage under your regular homeowners policy. Check to make sure it is up to date and that you have enough coverage. As a result of the 2003 and 2007 wildfires, we have found that most homeowners in San Diego are underinsured.

By the way, businesses should review their policies to be sure they have EQSL – or Sprinkler Loss coverage. There is a greater chance you will suffer damage from sprinklers leaking than from a building falling down.

by Ronald Reitz, President of Quality Claims Management

Ron Reitz is president of San Diego-based Quality Claims Management Corp., a nationally licensed public insurance adjuster, providing hazard claim recovery services to investors, mortgage servicers, homeowners and businesses. Earlier, he pioneered the national hazard insurance claims business of GMAC-RFC (now GMAC-ResCap). He is the past president of the California Association of Public Insurance Adjusters and currently serves on the board of the National Association of Public Insurance Adjusters. Contact Quality Claims Management at (866) 45-1183 or http://www.qualityclaims.com.

RESOURCES

The California Earthquake Authority is a publicly managed, largely privately funded organization that provides catastrophic residential earthquake insurance and encourages Californians to reduce their risk of earthquake loss.

Only a CEA participating insurance company or its agent can give you an exact CEA-premium quote, but to get a good estimate of the cost, use their handy premium calculator.

Quality Claims Management online article with maps to find out if your home is in a danger zone – check for landslide, liquefaction and earthquake fault zones. http://www.qualityclaims.com/homeowner.aspx?sect=_quakeinsurance

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For San Diego County Residents – Do You Need to Worry About an Earthquake Destroying Your Home or Business?

If you live in California, the US Geological Survey has said that Southern California will most likely be hit with a big earthquake within the next 30 years. They said that there is a 99% chance that we’ll experience a quake with a magnitude of at least 6.7. They also said there is 46% chance that we will have a 7.5 magnitude quake – or bigger.

So what does that mean for San Diego County residents? Even though the “big one” is supposed to have an epicenter somewhere in Southern California, most San Diego residents are not highly at risk. Well, at least compared to Orange County and Los Angeles (LA) residents. One indicator is earthquake insurance rates. In San Diego versus LA, the average premium cost in San Diego is only $251 per year compared to Los Angeles and Orange Counties which is $693 per year.

According to a recent San Diego Union Tribune article, a ‘Big One’ in California would not be like the recent big quake in Chile. Because California’s seismic plate tectonics differ from Chile’s, our region is not subject to the large magnitude quakes that they experience down there. In California the plates slide sideways while in Chile they slide under each other. Additionally the crust is a lot thinner here than in Chile. Because of those two factors, seismologists predict a maximum 8.1 quake at the worst for Southern California.

The San Andreas Fault, which extends from the Salton Sea to the town of Parkfield in Monterrey County, provides the greatest seismic threat. Luckily though, the Salton Sea area is a long distance away from most San Diego residents. In addition, the San Andreas Fault is inland and would not result in a tsunami, which caused much of the recent damage in Chile. There are several off shore faults near San Diego but they are very small and do not present much risk.

If a big jolt did indeed hit the San Andreas Fault near the Salton Sea, San Diego City residents would definitely feel it, but most likely would not experience catastrophic damage or casualties. Despite that, we do have a few smaller local faults that have the potential to generate a pretty big jolt. The most worrisome San Diego County faults are the Rose Canyon Fault on the east side of Pacific Beach and La Jolla. A little further south and inland, the La Nacion Fault runs through South San Diego, Chula Vista and National City. In the East County mountains and deserts, you need to be aware of the Elsinore, Aqua Caliente and San Jacinto Fault Zones.

So, depending on where you live, there is varying danger of fault movement and earthquake shaking. If you live close to a known fault, you should be aware of the possibility of a large jolt damaging your property. However, there are two other risk factors as well, they are landslide and liquefaction. During an earthquake, especially after wet weather, the violent earth shaking may trigger a landslide. However, of more importance is what your home or business is built upon.

Many San Diego homes and businesses are built on sand or on fill and are vulnerable to what is known as soil liquefaction. During a quake these kinds of soils can act like jello, amplifying a quake’s movement more than a home built on rock or settled land. Because of liquefaction, a home that is close to a earthquake epicenter that is built on rock may experience less shaking and damage than a home that is much further away that is built on sand or fill.

How can you find out what is under your home and what danger is neighborhood is in?

A great online resource to check out your specific neighborhood is this SANGIS interactive map to find fault lines, landslide and liquefaction zones in your San Diego community http://files.sangis.org/interactive/viewer/Viewer.asp

It’s a little complicated to find the dangers in your San Diego neighborhood. Start by clicking on the “custom map” button. On the right side scroll down and then click on Faults. Next click on Geologic Hazards. That will activate those map layers. Then hit Refresh at bottom of page on the right side.

Now is the fun part. Finding your neighborhood. Using the PAN and ZOOM IN controls, navigate around the map and zoom in to find your neighborhood and its geologic hazards for fault zones, liquefaction and landslides. You can zoom in to your specific block to get an idea of the earthquake related threats around your home or business.

If you are clear of all those, you probably don’t need Earthquake Insurance as much as someone whose home is in a liquefaction zone adjacent to an earthquake fault.

by Ronald Reitz, CPPA, President of Quality Claims Management

More info at http://www.qualityclaims.com/homeowner.aspx?sect=_quakeinsurance

Ron Reitz is president of San Diego-based Quality Claims Management Corp., a nationally licensed public insurance adjuster, providing hazard claim recovery services to investors, mortgage servicers, homeowners and businesses. Earlier, he pioneered the national hazard insurance claims business of GMAC-RFC (now GMAC-ResCap). He is the past president of the California Association of Public Insurance Adjusters and currently serves on the board of the National Association of Public Insurance Adjusters.

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Five Things to Do

1. Make sure your family and pets are safe. Find a place to live. Most insurance policies provide reimbursement for hotels and rental homes. You do not have to rough it. You are entitled to stay in a location with similar quality as your covered home. In order to ensure that you are fully compensated for your “additional living expenses” and “loss of use”, you will need to keep all receipts for meals, lodging, and purchases to replace damaged items from the time you left your home after the quake until it is fully repaired and you are able to move back in.

If you have a policy issued through the California Earthquake Agency, the Additional Living Expense coverage will probably not cover your living expenses during the repair process. You may want to contact FEMA for additional assistance.

2.Notify your insurance agent and/or insurance carrier that you have sustained damage to your home. If it is only minor, you may want to think and reconsider as your deductible may cover the damage that was caused. If you have suffered damage you believe is covered by your earthquake, business and/or homeowner’s insurance policy, you need to inform them that you plan on filing a claim. Coverage for some earthquake related losses might be available under certain sections of your homeowners or business policy.”

3.If you don’t like what your insurance adjuster is saying or if they tell you that the damage does not exceed your policies’ deductible, you should get an independent opinion. It may be time for you to call in a Public Insurance Adjuster, licensed structural engineer or a contractor who has had experience rebuilding earthquake and fire damaged homes.

“The adjuster sent by your insurance company to inspect your home after a quake may not know how to look for and identify earthquake damage,” warns UnitedPolicyHolders.org, a non-profit organization that fights for the rights of insurance consumers and educates individuals and businesses on how to get fair treatment. “Do not blindly trust your adjuster, especially if he or she tells you no benefits are owed because the damage did not exceed your deductible. Some companies reward adjusters for paying out as little as possible on claims. Your home is simply too valuable for you to rely on one person’s opinion, especially if that person is not a licensed structural engineer or an experienced contractor.”

4. You should do this BEFORE you have a disaster but most people don’t look carefully until after something bad happens. You need to take a close look at the “declarations” page.

That is the page that states your name, address, policy number, categories of coverage, dollar limits, endorsements, lender, etc.). Check the date to ensure that you are working from the most current, up-to-date copy because that will state exactly what your coverages are. The “Endorsements” (extras) will be listed and review the ones that apply to your policy. Every endorsement has a code number that matches text in the policy. (See Declarations Guide below)

Amy Bach of UnitedPolicyHolders, warns, “If you are confused, do not rely solely on your insurance company or THEIR adjuster for answers. Consult with professionals who specialize in advising or representing insurance consumers.”

5. Do not sign anything unless you are sure that you are being adequately compensated for your losses. Don’t provide a sworn statement or final “Proof of Loss” document to your insurer until you are positive that you understand your rights, your insurance policy coverage and endorsements, and the FULL extent of your claim and what it will take to make you whole again.

Don’t sign anything without proper legal advice first. Be especially aware of “releases or waivers of any kind. Carefully read all documents carefully, including both sides of all checks, to make sure they don’t contain “final” or “release” language.

Insurers have the right to take your recorded or sworn statement regarding your claim, and you must cooperate, provided their request is reasonable. However, giving such a statement without legal representation, or prematurely signing a final proof of loss may hurt your ability to fully recover the policy benefits you need to repair your home properly.

Insurance company adjusters often try to rush you into a fast settlement to save money and close your file. He or she may also claim that your home damage pre-existed the quake. Don’t be pressured. Take your time and get professional help if you need it.

Documenting a major loss to ensure a full, fair recovery requires work and lots of research. Before you can really know the true amount of your insurance claim, you must get estimates from reputable contractors, and be able to inventory all your lost or damaged possessions. This takes time. If your home is showing severe cracks, you may have foundation damage. A licensed structural engineer should fully inspect and tell you the scope of necessary repairs. Discuss repair options with a reputable contractor before settling your claim.

UnitedPolicyHolders Guide to What to Look for on the Declarations Page:

1. Your policy has categories of coverage and dollar limits for each one. The main categories are “Dwelling”, “Contents”, “Loss of Use,” (sometimes called “Additional Living Expenses”), and “Other (or ‘Appurtenant’) Structures” etc.

2. The dollar limits stated on your Declarations page may be lower than your true limits. Annual inflation factors, “endorsements”, and other additions contained in the policy increase your limits. Typical additions are 5% of your dwelling limit for debris removal and landscaping. Typical endorsements are Extended Replacement Cost coverage and Building Code/Ordinance coverage. Do the math to re-calculate your limits in all applicable categories.

3. The policy language may not provide the coverage you requested at the time you purchased it, and you may find you are under insured. In this situation, you may need professional help from a policyholder attorney or the Department of Insurance to determine whether an agent/broker or the carrier is legally responsible to solve this problem.

There are laws and regulations that protect you as an insurance consumer. Those laws are set forth in the California Insurance Code at section 790.03(h), the California Code of Regulations at Title 10, Chapter 5, and judicial decisions.

Take Your Time – Don’t Be Rushed

Even though you are in a hurry to get everything settled and to get your family back into your home, you need to take your time and do it right. Once you sign the final documents, you will have no recourse. Most people who sign quickly lose out on money that they could have got if they had waited. If you hurry, you will not be able to adequately remember all the possessions that you had purchased and are now destroyed. This is especially true of the little things- special tools and implements, the gifts, decorations and special items that only get used several times a year – on holidays or vacations. A rushed settlement only benefits the insurance company and its agents – not you.

Check out this Quality Claims Management online article with maps to find out if your home is in a danger zone – check for landslide, liquefaction and earthquake fault zones. http://www.qualityclaims.com/homeowner.aspx?sect=_quakeinsurance

by Ronald Reitz, President of Quality Claims Management

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NAIC’s financial risk disclosure requirement is broad, as climate change impacts insurers through a plethora of risk issues. Extreme weather events, government controls & effects of carbon emissions, rising water levels are just some of these issues.

Insurance companies are to report on how climate change will affect their business, in terms of financial risk plus their intended measure to manage this risk. Specifically, the climate change risk reporting requirements of insurance companies include:

1. Altering risk-management and catastrophe-risk modeling vis-a-vis the challenges caused by climate change;
2. Action plans to engage and educate policymakers and policyholders on the risks of climate change;
3. Changes in investment strategies.

Insurers, are not required to offer quantitative, forward-looking information nor commercially sensitive data.

“Climate change will have huge impacts on the insurance industry” said Joel Ario, chairman of the NAIC Climate Change and Global Warming Task Force of NAIC.

By bringing such focus on climate change, the insurance commissioners are leading the attention of insurers directly and policy holders indirectly to where it is due. The US insurance regulating body is also suggesting that insurance companies to tailor new products to the reality of climate change, such as insurance policies that curb emissions from policyholders, with auto coverage that tracks how many miles are driven and discounts for driving less.

Every insurance company whose annual premiums exceed $500 million will be required to lodge such an annual Insurer Climate Risk Disclosure report. The first report is due May 1, 2010.

The NAIC is a voluntary organization of the chief insurance regulatory officials for all 50 of the United States, the District of Columbia and five U.S. territories. Formed in 1871, the NAIC serves the needs of consumers and the industry. It has an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace.

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“The very high natural catastrophe losses incurred in 2008 again show the crucial importance of risk research for the insurance industry. In its annual review published today, “Topics Geo – Natural catastrophes 2008″, Munich Re’s geo risks experts take an in-depth look at Hurricane Ike – with losses of US$ 15bn, the industry’s most expensive natural catastrophe in 2008.

Hurricane Ike, which hit several Caribbean States, the USA and even Canada, although by then weaker, claimed 168 lives. Ike bore several distinct features:

* Primarily due to the enormous area it covered, Ike had the greatest destruction potential ever recorded in a tropical North Atlantic hurricane. Known as “integrated kinetic energy”, this factor is calculated from the wind speed and dimensions of a storm. It is also used as a measure for storm surge.

* The vast extent of the storm caused a very large storm surge in the Gulf of Mexico. In all, 50 oil platforms were destroyed, and nearly 100 more reported minor to severe damage. A 500-km stretch of the Gulf Coast between Texas and Louisiana was under several metres of water.

* Ike ultimately merged with a low-pressure system above the land mass, producing gale-force winds and torrential rain in the Midwest (primarily Ohio, Kentucky and Indiana) and even on the East Coast of the USA and in Canada.

Torsten Jeworrek, member of Munich Re’s Board of Management: “Hurricane Ike clearly illustrates the importance of thorough risk research in identifying loss potential. It is this which enables us to explore new and continuously evolving risk complexes so as to render them manageable and push back the frontiers of insurability. We will continue to insist on a commensurate price for the risks written, particularly since climate change and settlement dynamics will further increase losses due to weather-related natural catastrophes”.

The 2008 hurricane season, with 16 tropical storms well above the long-term average of 10.3 (1950–2007), confirms Munich Re’s assessment that the current warm phase will probably result in higher loss potential. However, Hurricane Ike also made it abundantly clear to the insurance industry that loss estimates undertaken in the immediate aftermath of complex individual events are particularly fraught with uncertainty.

Aggregate losses caused by Ike exceeded initial estimates by modelling firms and the industry. Since insurance companies’ first estimates were too low, Munich Re’s final claims burden was also higher than originally anticipated. Munich Re now expects a claims burden of approximately US$ 680m (after retrocessions). This claims burden is already taken into account in the preliminary figures published on 4 February 2009 for the financial year 2008.

The new “Topics Geo – Natural catastrophes 2008″ also takes a detailed look at the substantial loss potential from winter damage in China, and analyses the severe earthquake that shook the Chinese province of Sichuan in May 2008. According to Munich Re’s geo risks researchers, the insurance industry should interpret the Sichuan earthquake as a warning signal. This catastrophe shows that the risk of earthquake should on no account be neglected in comparison with that of typhoon and flood.

2008 loss figures

On the basis of figures adjusted for inflation, 2008 was the third most expensive year on record in terms of insured and economic losses. Overall losses came to US$ 200bn, a figure exceeded only in the hurricane year of 2005 and in 1995, the year of the Kobe earthquake in Japan. Last year’s most expensive catastrophe in macroeconomic terms was the earthquake in Sichuan, with direct losses of at least US$ 85bn. Insured natural catastrophe losses totalled US$ 45bn in 2008.

Click here to gain your own copy of “Topics Geo – Natural catastrophes 2008″ “

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“Natural catastrophe remains a manageable and insurable risk for private insurers, provided they have the proper underwriting, rating, and risk mitigation tools,” said Laura Kersey, AIA northeast region assistant vice president. “Nonetheless, some state public policymakers have proposed supplanting the role of the private insurance system through the creation of state Cat Funds and other government solutions that would undermine efforts to reduce risk and to encourage personal responsibility.”

According to AIA’s written testimony opposing Senate Bill 530, all states face some natural catastrophe risk, but the type and magnitude of the risk varies greatly by state, by regions within a state, and by type of policyholder. “It is unfair to expect inland residents to subsidize coastal development and beachfront property, or small businesses to subsidize homeowners – yet such subsidies are integral to the design and financing of state CAT Funds,” said Kersey.

AIA pointed out that Florida is the only state that has taken the gamble that a government-imposed mechanism can provide coverage more effectively than the private market. However, in the aftermath of the devastating hurricanes of 2004 and 2005, the Cat Fund ran out of money. “The deficit is now being paid off by a hurricane tax on most policyholders in the state, including many residents and businesses that are located in less risky areas, and may not even have been in the state when the hurricanes struck,” explained Kersey. In some hurricane scenarios, those assessments could last up to 30 years.

“Fortunately, the private property and casualty insurance industry is well-positioned financially and operationally to manage natural catastrophe risk,” concluded Kersey.

AIA member companies write more than 40 percent of Connecticut’s homeowners’ insurance market and almost half of the state’s property insurance market.

# # #

The American Insurance Association represents approximately 350 major insurance companies that provide all lines of property and casualty insurance and write more than $123 billion annually in premiums. The association is headquartered in Washington, D.C. and has representatives in every state. All AIA press releases are available at www.aiadc.org.

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Here are several self-inspections you can undertake after an earthquake to protect both your family plus your house.

Post Earthquake Safety Routine

1. As a minimum, check if there is a gas leak after an earthquake. However, it’s best to turn off the gas line altogether. If you can not turn off the gas and there is a gas leak, open the doors and everyone should leave the house immediately, and wait at a neighbor’s house. Call the fire department and wait for their arrival. Get an approximate timing for their arrival. If the gas pipeline is damaged or there is a smell of gas, do not use any gas or electric devices.

2. Another routine post-earthquake check is to look for broken or cracked water pipes in your home. If necessary, turn off the water. (Note: Even if your water pipes look ok, call the water company or check other authorities to determine if it’s safe to drink the water from the tab.)

3. Next, inspect the foundation of your home. Ensure it is not cracked nor sinking. If you find either kind of damage to your foundation, ensure everyone leaves the house till a professional examines and evaluates the problem and determines your home’s safety. While your house may still ‘feel’ secure, a sinking or cracked foundation may cause the home to collapse. Even small earth quake can cause foundation damage to your home, that sooner or later will lead to a collapse. If beams or columns are damaged leave the house as soon as possible and ask a civil agency to inspect and restore.

These are three important post-earthquake home safety self-inspections, that both ensure the safety of your family and avoid additional future damage to your home.

Post-Earthquake Community Care & Safety
For the overall safety of your community, after the earthquake, it is recommended that you:

1. Help each other for the disaster rescue. Have a look at the other buildings nearby. Their occupants may need your help.
2. Listen to the radio or watch TV any time, so you’re informed and not going with rumors.
3. If electric power is recovered after the power shutdown, do not use any electric devices right away but check first whether there is a leak of gas to keep away from any explosion or fire.
4. Do not use the telephone unless somebody has been injured or a building is damaged or burning. The emergency services may need all lines for the rescue.

About earthquake insurance

Earth quake insurance only covers damage caused by an actual event. And only after an earth quake actually occurred. Usually, earth quake insurance has a high “deductible”. In most states of the US, earth quake insurance is not a part of standard policies, but available at extra cost.

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How to get Earthquake Insurance?

Usually, you can usually add earthquake coverage to your current homeowners’ insurance policy.

What to cover in Earthquake Insurance?

Earthquake insurance coverage can include:
1. repair and replacement of your earthquake-damaged property;
2. repair and replacement of the contents of your earthquake-damaged home;
3. cost of temporary living expenses in the event that your home is completely destroyed due to an earthquake.
4. other factors specified by you, such as adjacent buildings like a garage.

How Much Coverage should you get?

Ideally, the amount of earthquake insurance you take out should cover the cost of completely rebuilding your home and replacing or repairing your damages.

Earthquake Insurance Premiums

Your premium for adding additional insurance for earthquakes will depend on:
1. the age of your home
2. the building materials used in the building
3. the construction method used for your home
4. the exact location of your home, particularly its proximity to zones with high earthquake probability.
Typically, newer homes and those made of wood tend to be more earthquake resistant. Homes not located in earthquake prone areas represent a lower risk to insurance companies. This led them to charge a higher premium for older homes, homes made of brick, and homes located in an earthquake-prone area.

Conclusion
Particularly if you live in a geographic area where earthquakes are likely, yous should seriously consider taking out this extra coverage, both for peace of mind and real security.

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According to the Federal Emergency Management Agency (FEMA), earthquakes are responsible for $4.4 billion worth of property losses each year, fourth among leading causes behind fires ($8.6 billion in losses), hurricanes ($5.4 billion in losses), and floods ($5.2 billion in losses). Insuring against earthquake losses is tricky. Here are five things you should know:

1. Standard homeowner insurance does not cover structural damage caused by an earthquake’s shaking. The violent shaking of an earthquake can seriously damage any building, including a home. Structures made of brick and stone, such as walls, fireplaces, and chimneys do not have the flexibility to bend very far without cracking or even collapsing. That same goes for tile work. As a result, floors, bathroom walls, and kitchen back-splashes are especially vulnerable to shaking damage. Many homes, particularly in the western United States, are built on concrete slabs that can crack as the ground moves in waves beneath them. Concrete foundations also can develop fissures, compromising their integrity. If the damage is severe enough, the home could be condemned and, in severe cases, torn down. Structural damage caused by an earthquake is not covered by a standard homeowners insurance policy.

2. Personal property losses due to shaking are not covered by homeowner insurance. Many earthquake-conscious homeowners take care to secure antiques, sculptures, and artwork to tables, shelves, and walls. Despite these preventative measures, a strong earthquake can dislodge valuable objects and send them crashing to the floor. The same is true for electronics: the sudden jolt of an earthquake can send a wall-mounted television flying toward oblivion, or cause an entire entertainment center to collapse, crushing fragile electronics. Personal property damaged due to shaking is not covered by traditional homeowners insurance.

3. Traditional home owner insurance covers indirect damage resulting from an earthquake. Roughly half the damage caused by earthquakes is from shaking. The other half occurs in the aftermath of the quake, when systems damaged by the shaking fail. For example, extreme ground motion can bend pipes to the breaking point. If a natural gas line ruptures, the released gas can cause an explosion or fire. Similarly, if a water line bursts, it can cause flooding inside a home, destroying drywall, flooring, carpeting, clothing, bedding, books, electronics, artwork and more. This kind of indirect damage to a structure or personal property is covered by traditional homeowners insurance.

4. Earthquake insurance must be purchased separately. It is possible to insure your home against damage cause by an earthquake, but it requires buying a separate earthquake insurance policy or an earthquake endorsement to an existing policy. In California, limited dwelling protection is available through “mini-policies” backed the California Earthquake Authority (CEA), a governmental agency. The cost of earthquake insurance varies, depending on several factors, including where you live, the age of your home, and the materials used to build it. Rates are higher in active earthquake regions, of course. Older homes cost more to insure than newer ones because they often were built to less stringent earthquake building codes. Brick and block homes cost more to insure than wood-framed homes, because they are less flexible and more prone to structural damage.

5. Earthquake deductibles are calculated as a percentage. Earthquake insurance deductibles are based on a percentage of the replacement cost of the home. They can range from as little as 2 percent of the home’s replacement cost to as high as 20 percent. Some homeowners opt to pay the higher deductible in order to keep their premiums low. Accepting a higher deductible comes with risks, though. For example, a 20 percent deductible on a home that will cost $250,000 to rebuild means that the homeowner will pay $50,000 of the costs. That is fine, if you have $50,000 in the bank. If you are thinking about borrowing against your home equity, you have a problem: A home with $50,000 worth of damage, or more, will not be worth what is was before the earthquake occurred. The home equity might disappear in the rubble.

Losing the equity in your home is bad enough, but losing the ability to rebuild is even worse. That, of course, is the danger you face if you do not have earthquake insurance. Worse yet, you still will be responsible for paying your mortgage. The odds of having your home damaged or destroyed by an earthquake may be slim, but the financial risks are too great to ignore, no matter where you live. If “the big one” hits, you do not want to be standing in your driveway, looking at the devastation and wondering what you will do next.

By Bradley Steffens

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