Most people will assume that you are covered under your homeowner’s policy should an earthquake damage your home, but I’m here to tell you that you are not. That’s right, you have no earthquake coverage. Don’t fret though, there is an “add on” you can purchase that will allow you to have coverage but it is important to understand how this coverage works.
This has definitely been a hot topic with the recent Earthquake that occurred in Oklahoma and was felt across the region in Texas, Missouri and in Kansas. So now that you know an earthquake is possible and that your standard homeowner’s policy doesn’t cover any damage, you probably would like to know more about that endorsement “add on” option.
Earthquake coverage is always an optional coverage so you must ask for it. The expense can be quite minimal depending on where you live. In the Kansas City, Missouri area the average price is around $60 a year. It’s important that you understand how it works because it’s quite different than other endorsements and that’s because the deductible is extremely high! The deductible is a percentage of your home coverage. The deductibles in our area range from 10% to 30% and are based on your homes replacement cost. If you look at your home policy or declaration page you will see “Coverage A”. That’s the amount that was determined to replace your home if you had a complete loss. You take that number and say 10% and now you have what your lowest deductible option could be. For example, if your home’s replacement value is $200,000 and your deductible percentage is 10%, that means if something were to happen your responsibility is $20,000 towards the damage. Unfortunately, this means you won’t be using this coverage unless it’s for a large loss. Breakage of windows, pictures, and dishes are items that you would be replacing out of pocket. It wouldn’t make sense to utilize your policy for smaller claims with such a large deductible.
Did you know that the coverage is not mandatory not even in states like California? In fact, in 2014 a survey showed that only 9% of Californian’s carried earthquake insurance. That statistic seems mind boggling considering their probability of an earthquake occurring. Californian’s have said that the annual premium is too expensive and with their home prices being so high the deductible on the earthquake insurance could be as high as $100,000 +. Many people choose to just be self-insured. We are here to help you weigh out your options, so please feel free to comment or reach out to us by phone or email with any questions.