When I would ask a Rhode Island resident if they would like to purchase earthquake insurance, I usually got a giggle, a grin, or a strange look. August 23, 2011 might have changed that. Considering Virginia was hit with 5.9 earthquake yesterday that was felt as far north as Maine, I guess it’s not a laughing matter after all. Mother Nature sent us a reminder yesterday that the east coast is not immune from earthquakes. How do you make sure your insurance is earthquake proof?
Unfortunately, most insurance policies exclude damage caused by earthquakes. Your home, your business, your rental property, your garage, and your apartment are most likely not covered for earthquakes. Earthquake is a standard exclusion on even the best policies out there, but don’t feel hopeless just yet. The good news is that earthquake coverage can be added to most policies by adding a special coverage endorsement. The cost of earthquake coverage will vary based on the total building value, the type construction, and the area you are in. Yet the coverage is often less than you may think. Since the East Coast is not as high of an earthquake risk as some other areas of the country, we benefit from much lower earthquake insurance rates. You can often add earthquake coverage to your home or business insurance for less than $100 per year. In light of yesterday’s events, it may be worth contacting your agent at Loiselle Insurance to inquire about this valuable coverage.
Now that we know earthquake is not covered under most building polices, what about car insurance policies? Your car insurance policy may already be earthquake proof without you even knowing it. If your vehicle is insured for Comprehensive coverage (also sometimes referred to as “Other than Collision” coverage), then you already have earthquake protection for your vehicle. Comprehensive coverage will cover damage to your vehicle that’s caused by something other than a collision, subject to exclusions. Earthquake is not excluded, therefore, it’s covered! If you have a newer vehicle, a vehicle with a loan, or a leased vehicle, you probably already have comprehensive coverage. If you do not have comprehensive protection on your car, it may be worth adding it to your policy. This coverage is usually more reasonable than collision protection and it would provide for other damage to your vehicle as well, such as that caused by hail, flooding, vandalism, a rock hitting your car or windshield, and theft.
As with most policies, earthquake coverage is usually subject to a deductible. The deductible is often a percentage of your building coverage limit. The most common earthquake deductible is 5%. Therefore, if your home is insured for $300,000 and you have added earthquake coverage to your homeowners policy with a 5% deductible, you would $15,000 deductible. All damage in excess of the deductible would be covered by your policy, subject to the policy limits on your declarations page. Earthquake coverage as it pertains to your auto insurance, would be subject to whatever deductible you have for your Comprehensive coverage, often $250-$500.
What did yesterday teach us? Perhaps we shouldn’t be so quick to shrug off the need for earthquake insurance. It may be time for a little earthquake proofing of your insurance policies. As the saying goes, “Better Safe Than Sorry!