FOR IMMEDIATE RELEASE
New York Press Office: (212) 346-5500;
media@iii.org
NEW YORK, March 31, 2014 — Reporters covering
the recent spate of earthquakes that have struck California can contact the Insurance Information Institute (I.I.I.) to discuss the insurance implications of the events with our experts.
The Friday, March 29 magnitude 5.1 temblor, centered in La Habra, east of downtown Los Angeles, was the third earthquake to strike the state this month. On Monday, March 17, a mild 4.4 earthquake struck Los Angeles and on March 10, a magnitude 6.8 earthquake struck Northern California.
The costliest earthquake in the United States, the 1994 Northridge quake, caused $15.3 billion in insured damages when it occurred (about $24 billion in 2013 dollars). It ranks as the fifth-costliest U.S. disaster, based on insured property losses (in 2012 dollars), topped only by Hurricane Katrina, the attacks on the World Trade Center, Hurricane Andrew and Superstorm Sandy. Eight of the costliest U.S. quakes, based on inflation-adjusted insured losses, were in California, according to Munich Re. There were six earthquakes in the U.S. in 2013, which caused only minor damage.
Earthquakes and Insurance
Earthquakes are not covered under standard U.S. homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of a supplemental policy from private insurance companies.
In California, homeowners can secure coverage from the
California Earthquake Authority (CEA), a privately funded, publicly managed organization, as well as from private insurers. The CEA does not offer coverage for commercial, industrial or business properties. The CEA gives homeowners discounts on their policies when they retrofit their older homes to better fit current earthquake standards—for instance, bolting the house to the foundation; bracing cripple walls with plywood; and strapping water heaters to the structure of the home.
“Earthquakes can strike suddenly, without warning and can occur at any time, and in any season of the year,” said
Loretta Worters, vice president of the I.I.I. “That’s why it’s important that everyone, no matter where they live, contact an insurance professional to make sure that they have the right type and amount of insurance.”
Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. It may cover increased costs to meet current building codes and costs to stabilize the land under your home. Earthquake insurance covers debris removal and pays for extra living expenses you may have while your home is being rebuilt or repaired. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard homeowners and business insurance policies in most states.
Review your earthquake coverage and declarations page or ask your insurance professional to explain whether you have coverage for landslides, mudflows, tsunamis or volcanic eruption. In some states, separate coverage must be purchased. In other states, landslides and mudflows are covered up to one year after an earthquake.
Cars and other vehicles are covered for earthquake damage under the optional comprehensive portion of an auto insurance policy.
Earthquake insurance policies often carry a deductible, generally in the form of a percentage rather than a dollar amount. Deductibles can range anywhere from 2 percent to 20 percent of the replacement value of the structure, depending on a myriad of factors such as where you live and the type of home you have. So, for example, if it costs $100,000 to rebuild a home and the existing policy has a 2 percent deductible, the policyholder would be responsible for paying the first $2,000 in repair costs.
The I.I.I.’s free mobile apps can help you create a disaster plan, learn about selecting the right insurance for your needs and budget, and create and maintain a home inventory. Learn more about our suite of apps here.
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