Is it Time to Consider Earthquake Insurance?

By DAVID PITT, AP Personal Finance Writer

Earthquakes and California go together. Or at least that's what most of the country thought until Tuesday's East Coast earthquake centered in Virginia.
Reports of the earth moving were widespread, coming from New York, Massachusetts, Vermont, and Georgia. Even a few came from as far away as Chicago.

Although no immediate news of significant damage emerged, such a widespread impact raises questions about preparedness and insurance coverage.

That's particularly because earthquake damage is not covered under standard homeowners or business insurance policies.

These policies typically exclude damage from earth movement such as earthquakes and sinkholes, said Chris Hackett, director of personal lines policies for Property Casualty Insurers Association of America, a trade group. However, it is common for property insurance to cover a fire that might be the result of an earthquake. It's a good idea to read your policy and know the exclusions.

And if you think that you'll never experience an earthquake, consider that about 5,000 earthquakes a year occur in the United States, according to the Insurance Information Institute. Quakes of various magnitudes have occurred in 39 states since 1900 and damage has been recorded in all 50 states. So although you might not be in a prime earthquake area, you're not immune.

Coverage for earthquake damages can be purchased as a rider to existing property insurance. Check to see if your insurer offers an earthquake damage rider. If not, you can shop around for a supplemental policy.

Although it's widely available, most property owners do not buy coverage.

Even in earthquake prone California, just 12% of homeowners have policies, Hackett said. The national average is even lower.

The cost of earthquake insurance varies depending on your location, the type of building and its age. Older buildings cost more to insure as do those made of brick. Wood frame structures withstand quakes better, therefore cost less to insure.

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