Do You Have Earthquake Insurance?

Contrary to popular belief, many homeowners do not have earthquake coverage. While, some may not believe it to be necessary, the recent earthquake which reached many locations in Kentucky is an eye-opener. What would you do if your home was destroyed due to an earthquake but had no issuance to cover it? Could you repair or rebuild?

Get the Facts on Earthquake Insurance

What you don't know can hurt you. For example, your basic homeowners policy doesn't cover damage, and if even if you do have the coverage on your policy the earthquake deductible is probably higher than you think.

Possibly the most important thing to know about earthquake insurance is this: A basic homeowners policy does not cover earthquakedamage. Even if you don't live in an area where earthquakes are common, it's possible you might need earthquake insurance.

Earthquakes have occurred in 39 states since 1900, and about 90% of Americans live in areas considered seismically active. Yet only a small percentage of people purchase earthquake insurance.

Even in California, where earthquake fears are a daily fact of life, only about 12 percent of homeowners have earthquake insurance, according to the California Earthquake Authority (CEA), down from 30 percent in 1996 when the state legislature created the CEA.

Each year, more homeowners get rid of earthquake coverage than buy it because, according to consumer groups, they believe the policies cost too much and cover too little.

According to the U.S. Geological Survey, there is a 70 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike the San Francisco Bay area during the next 30 years. (A magnitude 6.7 earthquake is equivalent to the 1994 Northridge, Calif., earthquake that killed 57 people and caused $20 billion worth of damage.)

Homeowner, condo and rental insurance policies do not cover damage caused by an earthquake, but coverage can be puchased as an endorsement or a separate policy. Earthquake insurance can be quite inexpensive depending on where you live. Contact your insurance agent or company to find out what the costs would be for your home.

Not surprisingly, Californians buy the most earthquake insurance, but earthquake insurance has been sold to residents of all 50 states.

The Earthquake Education Center at Charleston Southern University claims there's a 40 to 60 percent chance of a major earthquake somewhere in the eastern United States in the next 20 years. That has prompted the South Carolina Insurance News Service to recommend residents of that state consider purchasing earthquake policies.

The New Madrid Fault, which runs through Arkansas, Kentucky, Missouri and Tennessee, also has insurers worried. According to the Insurance Information Institute, there's a 40 to 63 percent chance the region will suffer an earthquake with a 6.0 magnitude in the next 15 years. The availability of earthquake coverage has become an issue in some regions of those states. For those who don't remember, which would include anyone not alive in 1811, an earthquake struck the New Madrid area with enough force to change the course of the Mississippi river and ring church bells on the east coast.

"The potential magnitude of a catastrophic New Madrid quake dictates that we approach the preparedness on a regional basis," says W.R. Padgett, board chairman of the Central United States Earthquake Consortium. "No one state can possibly begin to address all the issues."

What does earthquake insurance cover?
Ideally, your earthquake insurance policy covers the cost to replace or repair your damaged property. There are several options to consider when picking a plan, including:

Does the policy cover only the dwelling? Are accessory structures, such as garages, also included?

Will your policy pay for the contents of your home and for additional living expenses if your home is badly damaged or destroyed?

Are there any exclusions or limitations to coverage?

What deductible must you pay before the insurance kicks in?

How much does earthquake insurance cost?
Earthquake insurance rates are determined differently by each insurance company and can vary widely depending on several rating factors.

Generally, older homes cost more to insure than new homes. Wood homes get better rates than brick ones because wood tends to withstand quake stresses better.

In addition, areas are graded on a scale of 1 to 5 for likelihood of quakes, and this might be reflected in earthquake insurance rates. Because earthquake insurance is a type of catastrophic coverage, most policies carry a high deductible — anywhere from 2 to 20 percent of your replacement coverage limit.

For residents of California, one option is to get insurance through the CEA. The CEA is a state-sponsored private-public partnership providing earthquake insurance to California homeowners, renters and condominium owners. Insurance companies that belong to CEA offer a standard earthquake insurance policy with a 15 percent deductible. There's also a 10 percent deductible policy available. The CEA Web site has a tool to calculate your estimated annual earthquake premium. Californians can also buy earthquake policies outside the CEA.

How much coverage should I buy?
If you ultimately decide to purchase earthquake insurance, remember you should buy enough to cover the costs of rebuilding your house and replacing broken possessions. The amount of insurance you buy should be based on replacement and reconstruction costs, not the market value of your property and possessions.

You should also find out your rights for filing claims before you sign any earthquake insurance policy. It's important to know how much time you have to file a claim following a quake. In some cases, damage from earthquakes is not immediately apparent.

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Before Taking a Dip In The Swimming Pool, Consider the Insurance and Safety Implications

A Few Precautions Can Help Prevent Accidental Injury or Drowning and Protect You Financially, Says the I.I.I.

With temperatures soaring throughout the country, many people will be taking advantage of the heat-beating enjoyment of a swimming pool. Whether you have a luxury in-ground pool or plan to blow up an inflatable kiddie pool, it is important to consider the insurance and safety implications, according to the Insurance Information Institute (I.I.I).

Swimming pools are more popular than ever before. An estimated 8.8 million swimming pools are in residential or public use in the United States today, according to the Centers for Disease Control and Prevention (CDC).

“Pools offer a great way to keep cool in this heat and humidity, but they can also be dangerous,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “A child can drown in a few inches of water in less than 30 seconds.”

Indeed, there are over 3,400 fatal accidental drownings in the U.S. annually, with children ages one to four having the highest drowning rates. Fatal drowning remains the second-leading cause of unintentional injury related death for children ages one to 14 years old, according to the CDC. In addition, for every child who dies from drowning another four children will be treated for “nonfatal submersion injuries” which can cause brain damage that may result in long-term disabilities including memory problems, learning disabilities and permanent loss of basic functioning (e.g. permanent vegetative state).

The I.I.I. suggests taking the following steps if you own or are considering purchasing a swimming pool:

• Call your insurance agent or company representative
  Let your insurance company know that you have a pool or are getting a pool, since it will increase your liability risk. Pools are considered an “attractive nuisance” and it may be advisable to purchase additional liability insurance. Most homeowners policies include a minimum of $100,000 worth of liability protection. Pool owners, however, may want to consider increasing the amount to at least $300,000 or $500,000. You can also talk to your insurance agent or company representative about purchasing an umbrella liability policy. For an additional premium of about $200 to $300 a year, you can get $1 million of liability protection over and above what you have on your home.
  
  “You can be sued if someone drowns or is injured in your pool even if they do not have your permission to be there,” Salvatore warned. “So it’s important to have the proper locks and safety equipment and to have appropriate liability insurance.”
  
  If the pool itself is expensive, you should also have enough insurance protection to replace it in the event it is destroyed by a storm or other disaster. And, don’t forget to include any chairs, tables or other furniture around the pool deck.
• Contact your town or municipality
  Each town will have its own definition of what constitutes a “pool”, often based on its size and the depth of the water. If the pool you are planning to buy meets the definition, then you must comply with local safety standards and building and electrical codes. This may include installing a fence of a certain size, locks, decks and pool safety equipment.

The I.I.I. also recommends taking the following safety precautions:

1. Install a four-sided barrier such as a fence with self-closing gates to completely surround the pool. If the house forms the fourth side of the barrier, install alarms on doors leading to the pool area to prevent children from wandering into the pool or spa unsupervised. In addition to the fences or other barriers required by many towns, consider creating several “layers of protection” around the pool, in other words setting up as many barriers (door alarms, locks and alarmed safety covers) as possible to the pool area.
2. Never leave small children unsupervised—even for a few seconds. And never leave toys or floats in the pool when it is not in use as they may prove to be a deadly temptation for toddlers trying to reach them who might then fall into the pool.
3. Keep children away from pool filters and other mechanical devices as the suction force may injure them or prevent them from surfacing. In case of an emergency, know how to shut off these devices and clearly post this information so others can do so too.
4. Ask if pool users know how to swim. Learners should be accompanied by a good swimmer. If you have children, have them take swimming lessons as early as possible. And, do not allow anyone to swim alone.
5. Check the pool area regularly for glass bottles, toys or other potential accident hazards. Also, keep CD players, radios and other electrical devices away from pools or nearby wet surfaces.
6. Limit alcohol use around the pool, as drinking alcoholic beverages negatively impacts balance, coordination and judgment—and its effects are further heightened by sun exposure and heat. The CDC reports that alcohol use is involved in up to half of adolescent and adult deaths associated with water recreation.
7. Clearly post emergency numbers on the phone, in the event of an accident. Keep a first aid kit, ring buoys and reaching poles near the pool. You may also want to consider learning basic water rescue skills, including first aid and CPR training. For additional information, contact the American Red Cross.

The U.S. Consumer Product Safety Commission has launched Pool Safely, a pool safety campaign that can also be found on Twitter: @poolsafely.

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