Caleb Meriwether, Haven Insurance Partners, visits with Dan Reaves, host of ‘The Dan Reaves Show,’ at 3 p.m., today, Thursday, May 22, to discuss all things insurance.
Earthquakes can strike without warning, causing catastrophic damage to homes, businesses, and infrastructure. Standard property insurance policies typically exclude earthquake damage, making specialized earthquake insurance essential for homeowners and commercial property owners alike. Understanding what earthquake insurance covers and its common exclusions helps policyholders adequately protect their valuable assets.
For personal lines, earthquake insurance generally covers damage to dwellings, attached structures such as garages, and personal property damaged or destroyed by an earthquake. Coverage typically extends to costs associated with temporary living expenses if a home becomes uninhabitable.
Homeowners can also secure coverage for debris removal, foundation repairs, and land stabilization. However, earthquake insurance usually carries a separate deductible, often calculated as a percentage of the insured property’s value, typically ranging from 5% to 25%.
Commercial earthquake insurance similarly covers structural damage to business premises, commercial buildings, and their contents. This includes office equipment, inventory, machinery, and fixtures. Policies may also cover business interruption losses resulting from an earthquake, providing critical financial support to businesses during recovery periods.
Commercial property owners benefit from coverage extensions that address debris removal, engineering fees, and stabilization of the foundation and structure.
Despite the extensive protections provided, earthquake insurance has notable exclusions. Policies generally do not cover damage from related perils such as floods, tsunamis, or fires resulting from earthquakes.
Flood damage, including water damage from broken pipes due to seismic activity, is typically covered under separate flood insurance policies. Additionally, vehicles damaged in earthquakes are usually excluded, as automobile insurance policies address such losses. Earthquake policies also commonly exclude damages to exterior structures like fences, pools, and landscaping.
Personal property and business equipment coverage under earthquake insurance often comes with specific limits or sub-limits, which policyholders must review carefully to ensure adequate protection. For example, antiques, collectibles, and high-value items may require additional riders or endorsements for full coverage.
Geographic location significantly impacts earthquake insurance premiums, with higher costs in areas known for seismic activity. Property age, construction materials, proximity to fault lines, and local geological conditions also influence premium rates. Building improvements such as seismic retrofitting and adherence to current earthquake-resistant building codes can substantially lower premium costs.
Considering the financial devastation earthquakes can cause, earthquake insurance is a crucial risk management tool for both homeowners and commercial enterprises. It provides essential coverage for structural damage, loss of use, business interruption, and property contents.
However, awareness of its limitations and exclusions is critical to ensuring comprehensive protection. Policyholders should work closely with insurance professionals to tailor coverage to their specific needs, review their policies regularly, and update coverage limits to reflect property improvements or acquisitions.
Securing earthquake insurance is a proactive step toward financial resilience and peace of mind, providing reassurance that when the ground shakes, your personal and commercial assets remain well-protected.
