Quake coverage: What it can mean for your property and your wallet

Monday, April 18, 2011

While it's been nearly 200 years since the New Madrid Earthquake of 1812, Missourians are still concerned about earthquakes and continue to purchase earthquake insurance to protect their property. Californians buy the most earthquake insurance in the U.S., but Missouri ranks third in the country, with a total premium volume at more than $84 million, according to the Missouri Department of Insurance, Financial Institutions and Professional Regulation.

Earthquake coverage is not included on homeowners' policies. It must be purchased as separate coverage and is available for homes, farms and businesses. Earthquake insurance pays for damage caused by the shaking -- most often it's damage to a building foundations, said Mike Jones, State Farm insurance agent in Cape Girardeau. "There's no way to go in and patch that; you just have to rebuild," said Jones.

Earthquake insurance typically has a high deductible, around 10 to 20 percent of the cost of rebuilding the structure that is insured. For example, the owner of a $200,000 home or building could pay $40,000 in deductibles before receiving the benefits of an earthquake insurance policy. In Southeast Missouri, earthquake insurance averages about $40 per month, a 2010 survey by the Department of Insurance showed.

Jones worked as a claims adjuster with State Farm's national catastrophe team in the early 1990s, assisting homeowners after earthquakes in California. "We saw a lot of foundation damage and broken glass. We'd go to one house, cut the owner a check, then go on to the next house," he recalled. Premiums for Earthquake insurance can vary depending on the building materials and the proximity of the home to the fault line. Buildings with wood frames withstand tremors better than brick, stone or masonry, so their rates tend to be lower.

Some insurance companies offer earthquake insurance in other parts of the state, but not Southeast Missouri, according to the Department of Insurance. Jones said several companies in recent years have quit offering it all together. Only eight out of 19 insurance companies that offer earthquake coverage in Missouri provide it in Southeast Missouri.

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