Fortunately this weekend’s 4.7 earthquake that shook Southern California didn’t cause much damage but it’s a jolting reminder that a major quake could come at anytime. Yet, only 12 percent of all homeowners purchase earthquake insurance, said Terry Tigh.

Earthquake insurance is not covered under a standard homeowners policy.  Similar to flood insurance, earthquake insurance usually must be purchased separately.  Without earthquake insurance, you will have to finance all the losses to your home and possessions by yourself or rely on the federal government for assistance.

To help you decide whether or not you need earthquake insurance, first ask yourself this question: How much of a financial investment could I stand to lose if a major earthquake were to damage my home and possessions?

When you consider your resources, ask yourself how much of your investment in your home you are willing to put at risk.  For many California homeowners, their home is their biggest financial asset.  Without earthquake insurance, how do you plan to protect that asset from the costs of earthquake damage?  If you have a typical home loan and deed of trust, did you know you remain responsible for the loan balance even if your home is damaged or destroyed by an earthquake? 

Home owners should calculate the full sum it would take to repair or rebuild their home  in the event of an earthquake.  They should consider the full range of costs, from engineering requirements for rebuilding the home, to personal property, and additional living expenses during the reconstruction.

Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard homeowners  insurance policies.  Cars and other vehicles are covered for earthquake damage by comprehensive insurance which also provides protection against flood and hurricane damage as well as theft.

Earthquake insurance carries a deductible, generally in the form of a percentage rather than a dollar amount.  Deductibles can range anywhere from 10 percent to 25 percent of the replacement value of the structure.  This means that if it cost $400,000 to rebuild a  and there was a 15 percent deductible, the home owner would be responsible for the first $60,000 dollars.  In most cases, home owners can get higher deductibles to save money on earthquake premiums

Consider taking these basic steps as part of good planning and preparation: 

- Research the earthquake hazard in your area. 

- Secure the contents of your home to reduce the likelihood of damage and injury. 

- Investigate how well your dwelling is designed and constructed to resist damage from earthquake motion—retrofit the structure if necessary.  Analyze your finances and develop a financial-recovery plan in case an earthquake damages or destroys your home or its contents. 

- There is good information available to help you.  But only you can decide if earthquake insurance is right for you.

If you ultimately decide to purchase earthquake insurance, remember that you should buy enough to cover the costs of totally rebuilding your home.  The amount of insurance you buy should be based on replacement and reconstruction costs, not the fair market value of your property and possessions.  Your premiums will depend on where you live (premiums vary according to proximity to fault lines) and the type of home you have (wood frame or brick).

This news release is brought to you by the commitment and assurance of the A.D. Dern Insurance Agency, Inc., keeping you up to date and aware of the ever changing California Insurance market place. Continue to check back with us for other insurance articles of interest.

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