Understanding Earthquake Insurance: What’s Included and What’s Not
As an Oregon resident, I can’t shake the worry about a potential earthquake damaging my most significant investment: my home. After reaching out for a quote on earthquake insurance, I was shocked to find that the premium exceeds my entire bundled home and auto insurance (which is $830 per year). I requested and received the policy documentation, but I find it rather confusing. I’ve pasted some key details below.
Could any insurance adjusters help clarify the language concerning the exclusion of earth movement from earthquake coverage? What is the difference here? For context, this is from State Farm.
Coverages and Deductibles
The Earthquake and Volcanic Explosion Endorsement offers coverage for direct physical damage to insured property caused by an earthquake or volcanic eruption, specifically when the loss results directly from:
- Ground tremors
- Ground liquefaction
- Amplification of ground movement
- Ground shock waves
However, coverage excludes:
- Damages resulting from any earthquake or volcanic explosion that occurred before the endorsement took effect
- Earth movement—which refers to the sinking, rising, shifting, expanding, or contracting of earth, regardless of whether it involves water, sewage, or any other materials moved by the earth.
Included in the definition of earth movement are:
- Earthquakes (but only as specifically included in Section 1 – Additional Coverages for Earthquake and Volcanic Explosion)
- Landslides, mudslides, or mudflows
- Sinkholes or subsidence
- Movement caused by:
- Improper site compaction
- Incorrect site selection
- Extraction of natural resources
- Excavation
- Erosion
- Pressure from surface or subsurface earth or fill
- Any volcanic activity, unless explicitly covered in Section 1 – Additional Coverage for Volcanic Action or Section 1 – Additional Coverages for Earthquake and Volcanic Explosion
The deductible for losses due to an earthquake or volcanic explosion is based on a percentage applied to the Coverage A – Dwelling limit, and this amount is deducted from the total loss instead of any other deductible mentioned in the policy.
Note: All earthquake or volcanic activity within a 168-hour period is considered a single loss event.
It’s understandable to feel anxious about earthquakes, especially in a state like Oregon, which is seismically active. Let’s break down the key points regarding your earthquake insurance policy from State Farm and clarify the language around exclusions related to earth movement.
Inclusion of Earthquake Coverage
The policy covers direct physical loss from:
– Ground tremors: The vibrations caused by seismic activity.
– Ground liquefaction: When solid ground behaves like a liquid due to seismic shaking, potentially causing serious damage.
– Amplification of ground motion: Increased shaking intensity due to geological conditions.
– Ground shock waves: The waves of energy released during an earthquake.
Exclusions
The major exclusionary clause pertains to what is called earth movement, which generally includes a broader range of ground activity that isn’t directly tied to an earthquake event as defined in your coverage. Here’s a breakdown:
Pre-existing Events: Any earthquake or volcanic explosion that occurred before your endorsement becomes effective is not covered.
Earth Movement Exclusions: This is a critical part of the policy. Earth movement encompasses a variety of geological changes like:
This distinction is vital because while the policy is designed to cover damage directly caused by seismic events, it aims to limit liability for a wide range of earth movements that could occur for other reasons, potentially leading to substantial claims.
Deductibles
The deductible outlined means that a certain percentage of the dwelling coverage will be deducted from any payout for earthquake or volcanic-related damage. This is different from your typical home or auto policy deductible, and the percentage can be significant, affecting how much you might recover after a loss.
Conclusion
If you’re worried about the risk of earthquakes, understanding this policy can help clarify what you’re truly covered for. It’s a good idea to consult further with your insurance agent about specific scenarios or ask for clarifications on any doubtful areas in the policy. It might also be worth comparing coverage options from different insurers, as rates and included coverages can vary widely.
Always remember, the key factors are how an insurance policy defines and handles different types of risks and damages. Exploring additional options or endorsements that provide broader coverage may also help provide you with peace of mind.