Earthquake Insurance Policy
In the U.S., 39 states have experienced earthquakes since 1900, and 90 percent of the country's population lives in seismically active areas, but most of the at-risk population doesn't have earthquake insurance. This means when an earthquake damages their home or business, they have to pay out of pocket to rebuild and replace damaged or destroyed items. Earthquake insurance provides an affordable way of paying for damages when they occur.
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Geography
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Any resident in a state that experiences earthquakes should consider buying earthquake insurance, especially residents of states that frequently experience earthquakes, such as California, Oregon, Washington and Alaska. Earthquakes also happen in the Midwest and on the Eastern Seaboard.
Earthquake and Homeowner's Insurance
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A homeowner's insurance policy does not cover damage from an earthquake nor the fires stemming from one. A separate policy or an endorsement on a homeowner's policy is required. Condo and renter's insurance also do not cover losses from earthquakes.
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Damages Earthquake Insurance Covers
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Earthquake policy coverage varies. You can cover just your dwelling, or include "accessory structures" such as garages and/or storage buildings, or purchase a policy that also covers contents or one that only covers contents. It's a good idea to add the "additional living expenses" (ALE) option to any earthquake policy purchased, so you'll have funds for a hotel room or apartment if your home suffers damage that makes it temporarily unlivable.
Cost of Coverage
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Premiums depend on the amount of coverage, coverage type, deductible and various risk factors, such as location. Older homes cost more to insure while wood homes cost less because wood withstands quake stress better. Deductibles range from 2 percent to 20 percent of the policy amount, so if you insure your home for $100,000, for example, and it's destroyed in an earthquake, you pay the first $2,000 to $20,000 of the rebuilding cost. In California, the average annual policy for a homeowner costs $722, while a renter's policy to replace belongings ranges between $200 to $300. Those rates can go up significantly the closer the home is to a fault line.
Your Insurance Responsibilities After an Earthquake
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If your property is damaged during an earthquake, contact your insurance company immediately. Describe the damage in detail. Although an adjuster will visit the property, it is your responsibility to document damages. Make a list of destroyed or damaged items, take clear photos of the damage and include them with any required forms the company provides. Keep receipts for major purchases at another location, i.e. a safe deposit box. Provide copies of receipts of damaged items to the adjuster.
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