Earthquakes In Ecuador And Japan Provide Grim Reminder Of The Importance Of Understanding Earthquake Insurance Options In The United States

Only 10 Percent Of Homeowners Surveyed By The I.I.I. Purchase Earthquake Insurance

FOR IMMEDIATE RELEASE
New York Press Office: (212) 346-5500; media@iii.org
Janet Ruiz, California Office (707) 490-9365

 

NEW YORK, April 19, 2016 — Recent earthquakes in Ecuador and Japan are a reminder that people in many parts of the U.S. also face risks from earthquakes and should consider purchasing earthquake insurance coverage, according to the Insurance Information Institute (I.I.I.). 

 

Despite the earthquake threat in many states, including California and the Pacific Northwest, only about one in every 10 residential households on the West Coast have coverage for quake-caused property damage, according to the I.I.I.’s 2015 Pulse Survey.

 

Earthquakes are not covered under standard homeowners or business insurance policies. Coverage is generally available in the form of a supplemental policy that provides protection from the shaking and cracking caused by earthquakes that can destroy buildings and personal possessions. Coverage for other kinds of related damage, such as fire and water damage due to burst gas and water pipes, is generally provided by standard homeowners and renters insurance policies.

 

Earthquake insurance carries a deductible, generally in the form of a percentage of the insured value of the home rather than a dollar amount. Insurers in states with a higher than average risk of earthquakes, such as Washington, Nevada and Utah, often set minimum deductibles at around 10 percent—so equal to $10,000 on a home that would cost $100,000 to rebuild completely. In most cases, consumers can get even higher deductibles to save money on earthquake premiums.

 

Cars and other vehicles are covered for earthquake damage under the optional comprehensive portion of an auto insurance policy. 

 

In California, homeowners can also secure coverage from the California Earthquake Authority (CEA). The CEA now offers more options for homeowners dwelling coverage, including deductible options from 5–25 percent and other enhancements. The CEA coverage limit is the insured value of the home as stated on the companion homeowners insurance policy.

 

Over the past five years (2009–2014), sales of earthquake insurance (measured in terms of premiums written) rose by only 4.5 percent in California, compared to 13.2 percent for the U.S. overall. Oklahoma led the way for coverage with an increase of 242 percent over this same period of time (294 percent through 2015), as concern over earthquake damage from fracking activity became more widespread.

 

“While we’re seeing an increase in earthquake coverage in the most vulnerable states, everyone—no matter where they live—should contact their insurance professional to make sure that they have the right type and amount of insurance,” said Janet Ruiz, California representative for the I.I.I.  

 

In 2015, seismicity continued to rise in the central United States, with 32 earthquakes of magnitude 4.0 and greater in states such as Kansas, Oklahoma and Texas, compared with 17 such earthquakes in 2014.

 

The biggest earthquake to strike the U.S. last year was a magnitude 6.9 quake that occurred on July 27 southwest of Umnak Island, Alaska. There was no damage due to the remote location.

 

The costliest ever U.S. earthquake, the 1994 Northridge quake, caused $15.3 billion in insured damages when it occurred (about $25 billion in 2015 dollars). It ranks as the fifth-costliest U.S. disaster, based on insured property losses (in 2015 dollars).  More recently, on August 24, 2014, a 6.0-magnitude earthquake struck South Napa, California, killing one person and causing $700 million in total damage and $150 million in insured losses, according to Munich Re.

 

“All Americans need to be financially prepared, and have an up-to-date home inventory and an evacuation plan,” said Ruiz. “Purchasing an earthquake policy will protect their home from the disasters that pose a risk to their personal safety and property.”

 

RELATED LINKS

 

The I.I.I. has a full library of educational videos on its You Tube Channel. Information about I.I.I. mobile apps can be found here.

 

THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.

Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org

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