Understanding Earthquake Insurance: What’s Covered and What’s Not
As a homeowner in Oregon, I have a heightened concern about potential earthquakes impacting my most significant investment—my house. I recently sought a quote for earthquake insurance, only to discover that the premium exceeds my entire bundled auto and homeowners insurance costs ($830/year). After requesting more information, the policy documentation they provided left me feeling puzzled. I’ve included some of the policy details below and would appreciate insights from any insurance adjusters regarding the specific language around “earth movement” exclusions. What’s the distinction here? (This is through State Farm, by the way).
Coverage and Deductibles
The Earthquake and Volcanic Explosion Endorsement covers accidental physical loss to your property caused by an earthquake or volcanic explosion under certain conditions, specifically when the loss is directly associated with:
- Ground tremors
- Ground liquefaction
- Amplified ground motion
- Shock waves from the ground
What’s Excluded:
However, there are exclusions to keep in mind:
- Losses resulting from earthquakes or volcanic eruptions that occurred before the endorsement became effective.
- Earth movement, which includes the sinking, rising, shifting, expanding, or contracting of the ground, regardless of any accompanying water, sewage, or other materials.
Examples of excluded earth movement include, but are not limited to:
- Earthquakes (unless specifically covered in Section 1 – Additional Coverages)
- Landslides, mudslides, or mudflows
- Sinkholes or subsidence
- Movement due to:
- Improper compaction
- Site selection
- Natural resource extraction
- Excavation
- Erosion
- Pressure from surface or subsurface earth or fill
- Any volcanic activity, unless directly specified in Section 1 – Additional Coverages
The deductible for losses caused by earthquakes or volcanic eruptions is based on a percentage shown in the policy’s Declarations, applied to the Coverage A – Dwelling limit. This deductible is subtracted from the total loss amount and replaces any other deductibles outlined in your policy.
Important Note: All earthquake or volcanic activity within a 168-hour period is considered a single loss.
If anyone can clarify this exclusionary language and help me understand what it all means, I would greatly appreciate it!
I understand your concerns about earthquake insurance and the complexities of the policy language. Let’s break down the key points regarding what is covered and what is excluded.
Covered Losses:
Excluded Losses:
Key Differentiation:
The critical differentiation in the policy is around “earth movement.” While earthquakes are indeed earth movements, the policy specifically limits coverage for damage linked to the natural shifting or settling of the earth unless it is directly resultant from an earthquake at the time of the seismic event. This provision can be confusing, as it may seem that an earthquake is inherently a form of earth movement. However, the insurance typically only covers losses that are a direct consequence of seismic activity and not other types of ground movement.
Deductible:
The deductible is applied differently here compared to regular homeowners insurance. It’s a percentage of your dwelling coverage limit rather than a fixed amount. This percentage will be deducted from your claim amount if you make a claim based on covered losses.
Conclusion:
While the quote may seem high, earthquake risk in Oregon is significant and thus the prices reflect that. It’s crucial to read the policy carefully and consult your insurance agent for further clarification on specific language or scenarios you’re worried about. Understanding these details is essential to determining whether this coverage fits your needs and peace of mind regarding your home investment.