Earthquakes may be a rare occurrence on the east coast, but when they happen most people ask the same question. “Is earthquake covered by homeowners insurance?”
North Carolina has been greeted by a number of earthquakes (or aftershock tremors) over the years. Granted, our countrymen and women on the Left Coast giggle and snicker at how we react to such an event, the truth is most Tarheels don’t remember the last “quake”.
In this article, we answer a few questions as they pertain to earthquakes and insurance.
- Does My Homeowners Insurance Cover Earthquake
- How Can I Protect My Home From Earthquake Damage
- How Much Does Earthquake Coverage Cost
Does My Homeowners Insurance Cover Earthquake Damage?
No, earthquake damage is NOT covered by the standard homeowners insurance policy.
The fact is, damage caused by Earthquake is not a standard coverage under North Carolina’s Homeowner’s Forms. The common NC Homeowner’s Form (HO-3 & HE-7) is what the insurance industry calls a “Special Form Policy”.
Basically, that means that things (the industry calls “perils”) are covered under the policy unless SPECIFICALLY EXCLUDED. If you were to whip out your homeowner’s policy right now (if you can actually find it), you will see numerous exclusions, and yes, you would find the Earthquake Exclusion.
How Can I Protect My Home From Earthquake Damage?
Making sure your home is covered for an earthquake is actually very simple in North Carolina. Unlike damage caused by flood, homeowners insurance, and renters insurance policies can be endorsed to provide coverage for earthquakes.
While obtaining coverage for earthquakes is easy, the decision to add the Earthquake Insurance Endorsement should not be taken lightly. There is no way to predict when the next earthquake or tremor will occur (if there was a way the insurance carriers would already know). Therefore, this is not a coverage you should add then take off once you feel the threat is gone!
Simply stated, if you are going to add Earthquake Coverage to your homeowners insurance policy, you should do so after assessing the risk potential and then add the coverage and not look back.
The Earthquake Endorsement Can Not Be Added To A Homeowner’s Policy If There Has Been An Earthquake Or Tremor In The Past 7 Days With Most CarriersJack Wingate – ALLCHOICE Insurance
How Much Does Earthquake Coverage Cost?
The cost of adding Earthquake Coverage to your home insurance varies greatly and depends on a number of factors!
Earthquake Coverage Rating Variable – Location
Location! Location! Location!
Just like everything else in real estate, location does matter. While this rating variable doesn’t play a huge role in pricing for endorsements in North Carolina…the cost of earthquake coverage is exponentially higher in California (where earthquakes, and earthquake damage are far higher) than it is in North Carolina.
Earthquake Coverage Rating Variable – Construction
The construction type of your home plays a major role in home insurance, not just for the earthquake component.
In general, the higher the construction quality of your home, the lower your regular home insurance premium will be.
Example – A home with a construction of “Brick Veneer” has a lower home insurance premium than the same home which has a construction of “Frame”. However, when rating the earthquake endorsement, the inverse is true! This is because it costs more to rebuild/replace the high construction type.
Earthquake Coverage Rating Variable – Deductible
Your deductible plays a huge role in determining premium for most insurance. The higher the deductible, the lower the premium. The rating of the earthquake endorsement is no different!
While every carrier is different, the earthquake endorsement typically uses a percentage deductible for the earthquake endorsement. The standard earthquake deductible is 5%.
Example – your home is covered for $100,000. You have a 5% deductible. that means your actual deductible amount would be $5,000 ($100,000 X 5%).
Earthquake Coverage Rating Variable – Replacement Cost
While it should be no surprise, the most impactful rating variable for the Earthquake endorsement is the amount of coverage on your home!
The higher the replacement cost on your home, the higher the premium will be for the earthquake endorsement.
Know Your Options When It Comes To Earthquake Coverage
Earthquakes are scary! Making sure you know what you are covered for doesn’t have to be, feel free to reach out to ALLCHOICE if you have any questions about insurance for your Homeowners Insurance.