The 7.0 magnitude Earthquake recorded in Haiti underscores the harsh realities that fire and floods are not the only hazards that can cause a massive destruction of property and homes. That is why we need earthquake insurance policy for extra protection. However, deciding to go for earthquake insurance can be tough and confusing. This is because the policy is a bit expensive and varies significantly from other insurance policies. In this post, we give you an overview of earthquake insurance.
The Cost of Coverage
The cost of coverage for an earthquake varies geographically. For instance, the cost of coverage for a person living in earthquake prone regions located on the West Coast is higher than the cost of coverage for a person residing in Midwest where an earthquake event is hard to come by. In Midwest, you can get a price as low as 100 cents per $3000 coverage. In West Coast regions, you can get a price as high as $10,000 for a $700,000 policy.
Earthquake Insurance Policy Limits
Earthquake insurance has its payable limits. Most people think that getting this insurance will help them replace everything they lose. This is wrong because it is mostly designed to help you put a roof back over your head and not getting everything back. A typical policy does not cover for the loss of landscaping, swimming pools and separate home structures. Some policies limit cover for expensive jewelry, cars or any other silverware.
Earthquake Insurance for a Condo
Having earthquake insurance for your condo or townhouse is possible. The policy will cover for the damage of your belongings and also pay for accommodation somewhere while the condo is being repaired or replaced. However, you are liable for the fees payable to the condo association for any extra repair.
A deductible is an amount you can raise after the earthquake without the help of the insurance policy. A higher deductible attracts a lower premium while a lower one attracts a higher premium. Many insurance companies usually advise their clients against taking deductibles that can put pressure on their financial capability and limit their claim. The earthquake deductible is calculated as a percentage of the overall policy limit.
The Loss of Use
The loss of use during an earthquake occurs when you are displaced from your native location and forced to live somewhere. Most insurance policies allow 30% cover for such situations. However, loss of use due to an earthquake strict and quite limited. In most cases, it covers $2,000 or less for accommodation. In addition, most companies cover loss of use for a maximum of six months.
Earthquake insurance claims are rare in the US because most people ignore this policy. Even after the disastrous 5.6 Oklahoma quake that shook the country in 2011, only 20% of people have earthquake insurance in that region. This is a disaster in waiting.
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By: April Lavine
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