If you have earthquake insurance or are thinking of purchasing it, it’s essential to understand how this specialized insurance functions, including the deductible. Here’s what you need to know from the pros at Lang Insurance, independent agents serving the state of Missouri.

Who Needs Earthquake Insurance?

Earthquake insurance can benefit anyone living in an area at high risk of a seismic event. You might think that’s just residents of states like California or Alaska, but the US Geological Survey, a government scientific agency, has recently updated its list of states most likely to experience an earthquake. Arkansas, Illinois, Kentucky, and yes, Missouri were among the 16 states with the highest risk.

The benefit of earthquake insurance is that it covers damage to your abode and your belongings if an earthquake occurs. Earthquakes aren’t covered by regular homeowner policies. It’s easily added as an endorsement to your home insurance or as a separate policy.

What Does Earthquake Insurance Cover?

Earthquake insurance covers three things:

• Damages to your home (a.k.a. dwelling)
• Loss of personal property
• Cost of living elsewhere if your home becomes uninhabitable (a.k.a. loss of use insurance or alternative living expenses or ALE)

Policies may or may not cover your vehicles, swimming pool, or damage to landscaping. Floods or tsunamis that result from earthquakes are not covered and would require separate flood insurance.

A fire caused by an earthquake would typically be covered by your regular homeowner policy, as would water damage from broken water mains.

All seismic events within three days or 72 hours are considered part of one earthquake and therefore fall under the same claim.

How Is Your Earthquake Insurance Deductible Calculated?

The calculation of deductibles is where earthquake insurance really differs from other policies, such as home or auto insurance. The insurance is capped at the same amount as your conventional homeowner policy. However, the deductible amounts to a percentage of that limit, usually in the range of 10 to 20 percent.

For example, if your earthquake policy limit is $350,000, and your deductible is 10 percent of that, your insurance would pay $315,000 on your claim. You would be responsible for $35,000.

Sometimes, there are different deductibles for different elements covered. You may have deductibles for your dwelling, your personal property, and your detached garage, for instance. This is advantageous if only part of your property is damaged, such as the garage.

Given new knowledge about increased risk, we encourage many of our clients in Missouri to consider earthquake insurance, especially if they’re in the highest risk region to the southeast. To get more information or a quote, simply reach out online or give us a call at 636-229-7000 today.