Understanding Earthquake Insurance: Coverage and Exclusions
Living in Oregon, I often find myself anxious about the potential for an earthquake damaging my most significant investment—my home. Recently, I requested a quote for earthquake insurance and discovered that the premium is higher than my entire bundled auto and homeowners insurance, totaling $830 per year. After receiving just the quote, I asked for the policy literature, which I found quite confusing. I’ve pasted some details below, and I’m hoping insurance adjusters can help clarify the language regarding the exclusions for earth movement related to earthquakes. What’s the distinction here? This is with State Farm.
Coverages and Deductibles
The Earthquake and Volcanic Explosion Endorsement offers coverage for direct physical losses to covered property from an earthquake or volcanic eruption. This coverage applies when the loss is directly caused by:
- Ground tremors
- Ground liquefaction
- Amplified ground motion
- Ground shock waves
Exclusions:
However, there are several exclusions:
- Losses resulting from any earthquake or volcanic explosion before the effective date of the endorsement.
- Earth movement, which includes sinking, rising, shifting, expanding, or contracting of the earth, regardless of its association with water, sewage, or other materials.
- This category encompasses several specific conditions including:
- Earthquake losses (unless specified in Section 1 – Additional Coverages for Earthquake and Volcanic Explosion)
- 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, except as noted in the specific coverage sections.
For losses caused by earthquakes or volcanic activity, the deductible is based on the percentage shown in the Declarations for the Earthquake Deductible, applied to the Coverage A – Dwelling limit. This deductible is deducted from the total loss amount and replaces any other deductible in the policy.
Note: All earthquake or volcanic activity occurring within a 168-hour period is considered a single loss.
I appreciate any insights or clarifications to better understand this aspect of my policy!
It sounds like you’re grappling with the nuances of your earthquake insurance policy, which can indeed be confusing. Let’s break it down a bit.
The key point here is the differentiation between what is covered and what is excluded in terms of “earth movement.” Essentially, while your policy provides coverage for losses directly caused by earthquakes, there are certain types of earth movement that are not covered.
Coverage
The policy specifies that it covers:
– Ground tremors: These are the vibrations you feel during an earthquake.
– Ground liquefaction: This occurs when saturated soil loses its strength due to strong ground shaking.
– Damaging amplification of ground motion: This refers to the increase in ground shaking intensity.
– Ground shock waves: These are the waves produced during earthquakes that can cause significant damage.
Exclusions
However, losses caused by the following are excluded:
– Earth movement: This is a broad category that includes a variety of ground-related issues that don’t qualify as earthquake-related damage under the policy. The key here is that while earthquakes themselves are covered, many of their side effects related to earth movement (like shifting or settling of the ground) are not.
Here are the specific examples included in the exclusion:
– Landslides, mudslides, and mudflows: Natural events that can happen after significant rainfall or seismic activity that aren’t classified strictly as earthquakes.
– Sinkholes and subsidence: These are generally gradual processes that don’t result from the immediate shaking associated with an earthquake.
– Movement resulting from human activities: The policy excludes coverages relating to issues caused by improper compaction, excavation, or natural resource extraction — all actions that can affect the stability of the ground independently of earthquakes.
Why the Distinction Matters
The differentiation exists because not all earth movement results from seismic activity; some are due to natural geological processes or human actions. If you live in an area where earthquakes are common, it’s understandable to be concerned about potential damage. However, factors like landslides or sinkholes, although they may seem related, are viewed differently in terms of insurance risk.
Final Thoughts
Given your concerns about a potential earthquake in Oregon, it’s worth considering the deductible in the context of this coverage. The fact that all earthquake activity within a 168-hour period is counted as one loss can be beneficial if multiple shocks occur. Additionally, it might be worthwhile to discuss any specific concerns you have with your insurance agent — they could clarify how your particular policy addresses various potential risks and help ensure you’re adequately covered for the scenarios that matter most to you.
Since you found the quote to be high compared to your other policies, you may want to shop around, as other insurers could have different rates or coverage options for earthquake insurance.