As West Coast residents, we understand the ongoing possibility of earthquake damage.
Unfortunately, earthquake coverage isn’t automatically included in our normal homeowners insurance policies. And depending on which form the coverage takes, along with all the factors that go into pricing the policy, it can be expensive to add. It also may come as a surprise what is and isn’t covered by earthquake insurance.
Fortunately, as an independent agency, SELCO Insurance Services can help you shop around for affordable options that can give you peace of mind.
“Not all earthquake coverage is created equal (and can be quite confusing),” said Peter Bahen, Personal Line Sales Manager for SELCO Insurance Services. “It’s our job to sort through all the details to find the best fit for your needs.”
Standalone policy vs. rider
There are two methods of obtaining earthquake insurance for your home—through a standalone policy or with a “rider” added to existing homeowners insurance.
Here are a few important differences between standalone earthquake insurance and a rider:
- Standalone policies are often more comprehensive and readily available. In some cases, a rider isn’t even an option with a homeowners policy.
- Both coverages have a set deductible based on a percentage of a home’s replacement cost, with a rider deductible typically being higher. Depending on the policy, your home, belongings, and outside structures may all have individual deductibles.
- A rider often offers a lower annual premium, but you can’t always count on that. Many factors go into pricing the premium of earthquake coverage.
So, what do you get from earthquake coverage?
What’s covered
Earthquake insurance covers the “pure loss” of damage caused by an earthquake, meaning providers will assess the value of the items lost. Here’s what is covered:
- Dwelling & other structures not attached to the home, including garages, carports, storage buildings, and pump houses.
- Personal property like furniture, clothes, appliances, pots and pans, jewelry, musical instruments, and rugs.
- Temporary living expenses such as lodging, meals, and laundry when you can’t live in your home.
What’s not covered
Even the best earthquake insurance policies have their limits. Here are a few items that are commonly excluded:
- Water supply systems, such as wells, irrigation systems, sprinkler systems, and water reclamation systems
- Structures or equipment outside the foundation wall of the dwelling and underneath the surface, such as underground pipes, cables, flues, and drains
- Landscaping, trees, shrubs, lawns or plants
- Data (stored electronically or on physical records, like paper or accounting books).
Factors affecting cost of premiums
When underwriting an earthquake insurance policy, several factors are considered to determine the premium cost for earthquake insurance policies. Here are some of the main ones:
- Geographic location. Not surprisingly, areas near or within active seismic zones face higher premiums due to the increased likelihood of an earthquake.
- Structural integrity. Well-designed structures with modern construction standards are more likely to withstand earthquakes, leading to lower premiums.
- Age of the building. Newly constructed or retrofitted properties that meet seismic safety standards generally attract more favorable rates.
- Style of the home. A wood-framed house will withstand ground stress better than brick, leading to a higher premium for the brick home. Also, many earthquake policies don’t cover “masonry veneer,” which is the brick or stonework that sides a house.
A SELCO Insurance Services agent would be able to sift through all the details to find you the best coverage. It’s important to weigh the premium costs and deductibles against the amount you could afford to pay if a major earthquake damaged your home.
When an earthquake hits, the cost of repairs can be devastating. Let an independent SELCO Insurance Services agent help find the best coverage to set your mind at ease.
