Understanding Earthquake Insurance: What It Covers and What It Doesn’t
As a homeowner in Oregon, I have a persistent concern about the potential impact of an earthquake on my biggest investment: my home. I recently reached out for a quote on earthquake insurance and was surprised to find that the premium exceeds my total bundled auto and homeowners insurance (which is $830 per year). After requesting more detailed policy information beyond just the quote, I received literature that feels quite confusing. Below, I’ve pasted some of the policy details. I’m hoping that some insurance professionals can clarify the language, especially regarding the exclusions related to earth movement. What’s the distinction here? This policy is from State Farm.
Coverages and Deductibles
The Earthquake and Volcanic Explosion Endorsement offers coverage for direct physical losses to covered property resulting from earthquakes or volcanic eruptions when such losses are caused by:
- Ground tremors
- Ground liquefaction
- Amplified ground motion
- Ground shock waves
However, coverage excludes losses arising from:
- Any earthquake or volcanic eruption that occurred before the endorsement’s start date.
- Earth movement, which is characterized as the sinking, rising, shifting, expanding, or contracting of the earth, whether or not accompanied by water, sewage, or any other material moved by the earth.
Earth movement can include, but is not limited to:
– Earthquakes (unless specifically outlined in Section 1 – Additional Coverages for Earthquake and Volcanic Explosion)
– Landslides, mudslides, or mudflows
– Sinkholes or subsidence
– Movement resulting from:
– Improper compaction
– Issues with site selection
– Natural resource extraction
– Excavation
– Erosion
– Pressure from surface or subsurface earth or fill
– Any volcanic activity (with the exception of what’s covered in Section 1 – Additional Coverage for Volcanic Action or Earthquake and Volcanic Explosion)
The deductible applicable to losses due to earthquakes or volcanic eruptions is determined as a percentage, as specified in the Declarations, applied to the Coverage A – Dwelling limit. This deductible will be deducted from the total loss amount and takes precedence over any other deductibles noted in the policy.
Important Note: All earthquake or volcanic activity occurring within a 168-hour period will be treated as a single loss.
I’d appreciate any insights from adjusters or insurance experts to help me understand this better!
It’s great that you’re looking into earthquake insurance, especially given the seismic activity in Oregon. Let’s break down the key points from your policy and address your concerns regarding the exclusions.
Coverage Explained
The Earthquake and Volcanic Explosion Endorsement covers direct damage to your property caused by specific earthquake-related activities, such as:
– Ground Tremors: The shaking of the ground during an earthquake.
– Ground Liquefaction: When saturated soil loses strength due to shaking, causing buildings to settle or shift.
– Amplification of Ground Motion: Increased ground shaking intensity due to local geological conditions.
– Shock Waves: The seismic waves that cause physical damage to properties.
Exclusions Explained
Previous Earthquakes: Losses that occurred before the policy takes effect are not covered.
Earth Movement: This is a broad category that excludes various forms of ground movement, regardless of whether they are related to an earthquake or other factors. This includes:
The critical differentiation here is that while your policy covers damage specifically caused by the earthquake itself, it does not cover damage from other types of earth movement.
Why the Distinction?
Insurers often make this distinction to clarify that not all ground movement is related directly to seismic activity or an earthquake event. For example, if there were a landslide or subsidence caused by poor construction practices or natural erosion, that would not be covered under your earthquake endorsement.
Deductible
Keep in mind that the deductible for earthquake coverage typically differs from your standard homeowners policy. The deductible is expressed as a percentage of your dwelling limit, which can result in a higher out-of-pocket expense in the event of a claim.
Final Thoughts
Given the nuances of your policy, it might be beneficial to speak directly with an insurance agent or adjuster who can provide more context specific to your situation and clear up any more specific confusing terms you might encounter. Additionally, if the price is a concern, you could consider shopping around for quotes from multiple insurers to find a more competitive rate for earthquake coverage.
It’s always better to be informed and prepared, especially with regard to such an essential investment as your home.