University of California Study Reveals Startling Earthquake Discovery

Are you earthquake insured?
Any good insurance company in California will inform you that you should get earthquake insurance. A very recent study revealed that a 7.4 magnitude earthquake could be unleashed due to a long system of fault lines running from San Diego to Los Angeles. This causes a big worry for home owners who aren't covered.

The earthquake study was done at the University of California and focused on the Newport-Inglewood and Rose Canyon faults. It was discovered that these two faults, till now thought to be separate, are actually one continuous fault. This long fault runs all the way from Coronado, going through Rose Canyon and Seal Beach in Orange County, ultimately going through the Los Angeles basin.

The team used two different methods for approximating the magnitude of the potential earthquake. Both these methods resulted in an estimated magnitude of 6.7 to 7.3. Keep in mind that even lower magnitude earthquakes would cause loss of lives and serious damage.

In light of this startling discovery, it makes all the sense in the world to get earthquake insurance. Here are a few things you should keep in mind about earthquake coverage.

You won’t be covered by your homeowners insurance
Earthquake damage is not covered by most renters, condominium and homeowners insurance. Just like flood insurance, in California you will have to buy earthquake insurance independently. If you don’t, you will have to pay for things like broken possessions and repairs out of pocket. You may even end up paying for rebuilding your home in case of a large magnitude earthquake.

What earthquake insurance covers
There are different earthquake insurance plans, with varying costs and coverage. Different variables determine what kind of plan will work best for you. The primary purpose of earthquake insurance is to rebuild or repair your house in case an earthquake damages it.

While insurance will cover some items, it won’t be able to replace all items. Depending on the policy, the coverage may include additional living expenses in case you need to stay at a hotel or someplace else during the time your house is being repaired. Every earthquake policy will have exclusions. For instance, damage to vehicles isn’t covered by earthquake insurance. Neither is the land around a house or anything that homeowners insurance policy covers.

What earthquake insurance costs
Obviously, insurance cost varies depending on location. So it makes sense that a high-risk area carries a higher insurance price tag. The cost of your earthquake insurance will also depend on the deductible you select. A deductible is the amount you pay out of pocket before the insurer covers any remaining expenses. If you choose a higher deductible, your premium will be lower.

The deductible options are given as a percentage of the amount at which your home is insured. So if your home has a replacement cost value of $400,000 and you have selected a 10% deductible, then you will have to take care of the first $40,000 in repairs. Your carrier will be responsible for covering the remaining $360,000 of the claim.

You also have to take care of other risks. For instance, strengthening your house by modifications/retrofitting will reduce your risk. Retrofitting includes home maintenance, like strapping water heaters to your home’s structure or bolting the house to the foundation. In any case, getting earthquake insurance has certainly become an even higher priority for the people of California.

Here's an example of an earthquake policy:

Posted 6:35 PM

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