The Glaring Deficiency
Nearly everyone buys homeowner insurance for their home. It’s required by mortgage companies and generally accepted as the responsible protection for what many consider to be their most valuable investment. Homeowner insurance policies provide excellent protection against a variety of common losses. However, they do not provide protection from one of the most damaging and most likely events expected to affect us all!
The Threat is Real
Scientists warn that we are overdue for a major (6.0 or larger) earthquake in the Puget Sound area, and it could happen at any time. In fact, at some point in the next 50 years, they warn a magnitude 9.0 earthquake may rock the Pacific Northwest. Emergency management experts say if it does, it could be the most costly and most destructive disaster in the country.
Like floods and landslides, earthquakes are major events that leave widespread damage but are not covered by a homeowner policy. This limitation in coverage is a glaring deficiency, and yet only about 10 percent of homeowners choose to protect their home by purchasing earthquake insurance. While it is true earthquake coverage can be expensive, it’s an investment more homeowners have started to consider.
Homeowners have several options when they buy earthquake coverage. Some may be able to purchase it from the same company that provides their homeowner insurance. Others may consider using a specialized earthquake insurance provider. In many cases, we recommend earthquake policies that also include damage caused by landslides and mudflows, both equally concerning given the number of homes in our community on hillsides and slopes.
Earthquake insurance policies are not standardized, so here are some things to keep in mind:
What do you want to insure? A homeowner can choose to purchase insurance for just the structure. They can also purchase additional coverage to protect belongings inside the home, as well as unattached structures like garages. Other important coverages may include additional living expenses, especially if the home is severely damaged. Keep in mind, major events may leave many people in need of temporary housing and it can cost more than anticipated.
Are there limitations or exclusions? Flooding, tidal waves and tsunamis, even when caused by an earthquake, are not necessarily covered by earthquake insurance. Every policy is different and includes different exclusions. Be sure to read each policy before making a decision.
What are the deductibles? Typically speaking, earthquake insurance only pays for damages that exceed the deductible. We often see deductibles starting at $500 all the way up to 25 percent of a home’s total value. Think what those percentages mean in real dollars and choose your deductible wisely from the available options.
Knowing the risk of an earthquake and understanding your insurance options is critical. Working with an independent insurance agent who has access to multiple carriers is the only way to find the right products to fit your individual needs while ensuring what matters most to you and your family is properly protected.
Trevor Campbell is the President of Insurance Services Group, an Edmonds based independent insurance agency serving clients throughout Washington and seven other Western States. He chairs the Washington Education Committee for the National Alliance for Insurance Education and Research. He is a Past President for the Professional Insurance Agents Association of Washington and Alaska and was the 2013 Agent of the Year.
