Last night most of us experienced the rare occurrence of an earthquake right here in New Hampshire and throughout our neighboring New England states. Though there has not been any extensive damage reported within New Hampshire, it may get you wondering if you would have coverage on your homeowners policy should you have damage caused by an earthquake.
The short answer is no. Most insurance companies follow a standardized form, or use one very similar to it, that specifically excludes earth movement. Earth movement is defined as an "earthquake, including land shock waves or tremors...earth sinking, rising or shifting." This wording is typical in most insurance policies covering most types of properties, whether it is a home, rental property, condominium, commercial property or personal/commercial belongings.
The good news is that coverage for an earthquake or earth movement can be added as additional coverage. The cost of coverage depends on the amount of insurance on the building, the physical structure of the building (whether it is frame, masonry or superior construction) and where the building is located.
Unlike a flat deductible that is typically on a property policy, earthquake coverage is usually written with a percentage deductible of either 5% or 10%. This deductible can be significant as it not a percentage of the loss, but rather the amount of coverage on the building if a homeowners policy or most commercial policies covering a building. This means that if you choose a 5% deductible on your home that has dwelling coverage written for $250,000, you would be responsible for the first $12,500 in earthquake damage. If you own multiple commercial buildings on one policy, the deductible may apply to each building.
If you have a tenant's or condominium policy, the deductible is typically based on the amount of coverage written on your personal property.
There may be other deductibles available, but keep in mind that the lower the deductible the higher the premium, so you want to find a balance that is right for you and your budget. We suggest that you call Holt Proctor McBriarty Insurance Agency or your insurance professional to get a quote and an idea of your options.
At first glance you may not like the price. I have been carrying earthquake insurance since I built my house 13 years ago and coincidentally considered dropping it recently. What stops me from doing so, even before this earthquake, is the thought of my financial ruin should an earthquake occur and significantly damage my home. Taking the premium increase for having this peace-of-mind and dividing it into twelve monthly installments, makes it easier for me to realize its importance and relative insignificance to my overall protection.
For more information about the NH earthquake, visit WMUR. For more information on how to protect your home or livelihood, call your insurance professional. It doesn't cost you anything to gather information or get a quote.
This blog was written to provide a basic understanding of earthquake coverage. It is strongly suggested that you call your insurance professional to discuss the specifics of your policy as we are in no way intending to universally interrupt coverage.