Don’t Get Caught With Insufficient Earthquake Coverage
Fact-checked with HomeInsurance.com
If you live on the East Coast, an earthquake may not seem any more real to you than the ride at Universal Studios. However, those on the West Coast know just how real they are, and yet somehow, have enough faith in their insurance company and love their way of life enough that they won’t pack it in and move across the country even after experiencing several earthquakes.
You’re probably thinking it doesn’t matter if they moved or not, as many are quick to say that earthquakes aren’t restricted to the West Coast. Sure, we all know states like California and Oregon get them, but for the most part, earthquakes just don’t trouble the Midwest and eastern states — right?
At least that’s what several Oklahoma residents believed, only to be proven wrong by a string of mid-magnitude earthquakes that continue sending small tremors throughout Central Oklahoma. As many as 16 small earthquakes ranging from 2.8 to 4.3 in magnitude have been recorded over the last couple weeks around both Luther and Arcadia, with April 23 shaking things up quite a bit when that day alone delivered 10 earthquakes. Oklahoma is the perfect new poster child for “that can’t happen here; we don’t need insurance for that.” Unfortunately, that’s not the truth, and Oklahoma isn’t the only state with some faulty rationalization either.
“This is something new,” Luther’s Mayor Cecelia Taft stated. “We never had anything. Now all of a sudden, it’s just hitting us.”
Those are the famous last words many speak right before discovering that their homeowners insurance wasn’t all it was cracked up to be — and that it may not offer sufficient insurance or sometimes, any insurance coverage, when the cracks start to show.
Ready as Ever?
Approximately only $6.74 million in premiums are being written every year for residents living in the state of Oklahoma. As a matter of fact, Dan Ramsey, the president and CEO of the Independent Insurance Agents of Oklahoma, has estimated that less than 1% of homeowners in the state even carry earthquake insurance. Residents just don’t seem to be taking earthquakes seriously, despite a quake in Sparks in November 2011 which caused a highway to buckle, resulting in damage to more than a dozen homes.
But Oklahoma isn’t the only state to recently be a hotbed of seismic activity. In 2011, another fairly large and unexpected earthquake was centered in Virginia, and was felt across several states, including Washington D.C., and even as far north as Ohio.
Worth Shaking up Your Wallet for?
Though no one’s entirely sure what’s causing the quakes in Oklahoma recently, Mayor Taft is urging all residents to protect themselves and their property, and is playing the “better safe than sorry” card.
“That’s all we can do,” she said.
This statement is made in hopes that no Oklahoma residents are stuck with huge bills for home repairs. Repairing any damage done to a home can be extremely costly, but if you live in what’s been deemed a “non-earthquake zone,” paying an extra amount for insurance every year can seem like a big waste of money.
Fortunately, earthquake insurance in Oklahoma isn’t nearly as expensive as it would be if you were to purchase it for a home on the West Coast. Though it depends on the level of coverage you want, most Oklahoma homeowners can expect to pay anywhere between $100 to $150 annually for earthquake insurance. If you’re thinking “That’s an extra night at a hotel room on this year’s vacation! Forget it!” Try digesting this — at most, homeowners in Oklahoma can likely plan on monthly premiums of about $12.50 a month for earthquake coverage. That’s not so bad. The average earthquake loss is $93,746 — that’s definitely not so easy to digest.
How All Homeowners Can Seal the Cracks
In Oklahoma or not, homeowners need to do way more than just buy the coverage though — it’s crucial for homeowners to read the fine print and understand exactly what’s covered and what’s not, as well as what the deductibles are. Many earthquake policies have specific nuances that may or may not include certain items in and on your home from being covered. Brick and stone veneers, for example, often aren’t covered under earthquake coverage.
Additionally, earthquake insurance often has its own deductible that’s separate from the deductible on a standard homeowners policy. The deductible can be calculated in different ways, but more often than not, the deductible will be calculated as a certain percentage of your property’s value. For most homes, this percentage varies between 5% to 10%, though depending on a number of factors, that percentage may increase or decrease. So if your home is valued at $100K, you can expect to pay a separate earthquake insurance deductible of $5K to $10K.
Almost all insurance providers offer some form of earthquake insurance, so “not being able to find it” isn’t an excuse either. What it is though is an opportunity for you to have a lot of flexibility in terms of what the policy can give you, as well as what your earthquake coverage will cost in addition to your standard homeowners insurance. You may not be able to do anything to stop earthquakes — it will always be their own fault. Regardless of where you live, if you experience an earthquake, suffer a loss, and lose most, if not all, of everything you own though, only to discover your homeowners insurance won’t pay you a dime, it’s sad but true — that won’t be anyone’s fault but your own.