Earthquake Scare? Don’t Flush Your Money!!!

Whether it is the Government, the Media or Private Enterprise, don’t allow consumerism tactics to scare you into spending your hard earned dollars!  Similar to any other decision, the principles of earthquake insurance should be fully understood before handing out earned and taxed currency.

Who is the ideal Earthquake Insurance Candidate? A property owner who has a sizeable amount of equity and would like to insure the reconstruction of the dwelling in the event of an earthquake.

Who is the least ideal Earthquake Insurance Candidate?  A property owner who has little or no equity, is suffering financial hardship and most likely may insure for one year and will discontinue after the first year due to difficulty in paying the premium.

What is different about Earthquake Insurance Deductible? Earthquake Insurance Deductible is stated in terms of a percentage of the coverage limit;  i.e.  a home with a Dwelling Limit of $550,000 with a 10% deductible will have a $55,000 deductible in the event of an earthquake related insurance claim. Deductible offerings range from 2.5% to 25% of the coverage limits. It is common for the affluent homeowners to buy earthquake insurance policies, these policies are purchased with a long term assessment of risk and most commonly, the higher range of deductibles are sought.

What are the Customizable Variables of Earthquake Insurance? Following the obvious primary element of coverage, The Dwelling, there are three other elements which may sometimes be customizable; Other Structures, Personal Property, and Loss of Use.   In the recent past, the industry has realized that many affluent consumers have made inquiries as to why a fixed package needs to be purchased similar to homeowners insurance; for instance, many homeowners only wish to purchase earthquake insurance for the Dwelling coverage but not wish to pay premium for any other coverage, this is now an available option.

How do I make a long term financial assessment of risk? Once one understands the coverage elements involved with earthquake insurance, ti is time to assess which coverage makes more sense, the perceived risk of damage caused by an earthquake, a general idea for timeline when the homeowner may feel a large earthquake may occur and finally the premium which will be paid for the number of years (timeline) plus the deductible of choice.

Catastrophic Event! – Small to Moderate Earthquake Tremors!  Earthquake Insurance is designed to protect one’s home in the event of a truly catastrophic event; due to the deductible structure and nature of less serious cosmetic damage which may be caused by light to moderate tremors, earthquake insurance will seldom be worth buying if the consumer is expecting some light cosmetic damage; perhaps some cracked stucco or damaged drywall needing cosmetic repair.

Although Earthquake Insurance is more common in the Western Coast States; Alaska, Washington, Oregon & California, the coverage is available in all other States.  As in all other forms of insurance, the premium is commensurate to the risk.

Once the principles of Earthquake Insurance coverage are understood, it is time to speak to a well versed representative to answer any specific concerns which may help you further assess whether earthquake insurance is likely to protect your assets or more likely to add to your expenses with little or no chance of recovery.