Earthquake Insurance

Earthquake is a natural catastrophe and is caused by breaking and moving of rocks under the earth’s surface. Earthquakes have been known to cause huge losses throughout the history of mankind. Many home and car insurance policies do not give earthquake insurance. Earthquake insurance has gained immense popularity in recent years because of their increasing number as well as the extent of losses caused by them. Like other insurance policies earthquake insurance holds a deductible. This deductible is mostly a percentage rather than a dollar amount. Deductibles usually vary from 2 to 20 percent of the value of the insured asset. Although damage to buildings and personal possessions is not covered by standard home and car insurance policies certain losses (such as those caused by fire and water leakage) caused by earthquakes are covered.

Premiums of earthquake insurance also depend on the policyholders’ location. Earthquake insurance companies in states having higher probability of earthquakes (such as California, Utah and Nevada etc) usually charge higher premiums than those charged by companies in low risk states. Like other insurance policies you should buy earthquake insurance keeping in view your individual situations. Some important factors you should consider before buying earthquake insurance include features and prices of different earthquake insurance policies, financial standing of the earthquake insurance company, probability of earthquakes in your (specific) location and age and condition of your house. You should thus take into account the above-mentioned factors before buying earthquake insurance.

You should buy earthquake insurance adequate to cover the cost of rebuilding your property, cost of incorporating improvements and temporary living expenses. However, buying earthquake insurance is a preferable option to having no insurance at all especially for people living in areas prone to earthquakes. You can buy earthquake insurance from the company that has insured your home or from a standalone company. Nonetheless, you should take care to ensure that the company has a strong financial standing and a well-established history of fully paying legitimate claims. This is all the more important for companies providing earthquake insurance because a large number of claims will become due at the same time and it may be difficult for the company to pay all of them leading to bankruptcy. There are numerous important factors you should think before buying earthquake insurance. Some of these are discussed below:

The first is what does your earthquake insurance cover. At minimum your earthquake insurance policy should cover replacement cost of your home. There are a number of options available in earthquake insurance policies available today. Carefully analyze your distinct needs and determine which one is the most suitable for you:

• Does your earthquake insurance policy cover additional structures such as garages and swimming pools etc.?
  
• What does your earthquake insurance policy exclude?
  
• Will you be able to rebuild or repair your house within the coverage limit of your earthquake insurance policy?
  
• Do you need a separate home contents insurance policy or your earthquake insurance policy covers your personal property?
  
• Does your earthquake insurance policy include payments for additional living expenses?
  
• Will you be able to afford the deductible on your earthquake insurance policy in adverse circumstances?

Premiums of earthquake insurance are determined by a number of factors. For example earthquake insurance for older homes require higher premiums. Brick homes will have higher premiums than wooden homes. Moreover premiums of your earthquake insurance policy will also depend on the likelihood of earthquakes in your neighborhood. Earthquake insurance companies rate areas from 1 to 5 based on the likelihood of earthquakes.