Author: Mike Causey, Insurance Commissioner
Did you know that standard homeowners’ insurance policies do not cover damage from earthquakes? That means that if you want to make sure you’re covered for earthquake damage, you’ll need to contact your agent and add an earthquake endorsement to your policy.
February is Earthquake Awareness Month. It’s a good time to make sure you’re prepared for an earthquake should one hit North Carolina.
Your first reaction to a suggestion of adding earthquake insurance coverage may be one of surprise. After all, we’re not California, where earthquakes are more commonplace.
While large, high-magnitude earthquakes in North Carolina are rare, the state does experience dozens of smaller quakes a year on average. According to EarthquakeList.org, a magnitude 1.7 quake hit near Rosman in Transylvania County on Feb. 7.
Many will remember the 5.1 magnitude earthquake centered in Sparta in 2020. It was the strongest earthquake to hit North Carolina since 1916. Many homes and businesses were damaged. Fortunately, there were no reports of fatalities.
Unfortunately, many of the damaged homes and businesses lacked earthquake insurance.
For most of us, our home is our biggest financial investment. I recommend that you protect your investment by making sure you have sufficient insurance coverage. It’s a good idea to review your coverage with your insurance agent annually.
Earthquake insurance covers repairs needed because of earthquake damage to your dwelling. It may also cover other structures on your property not attached to your house, such as a garage or storage building. It also ensures your personal property against damage from an earthquake.
The cost to remove debris and pay for extra living expenses you may have while your home is being rebuilt or repaired may also be covered by earthquake insurance.
Earthquake insurance isn’t very expensive. However, its deductibles work differently than we’re used to for homeowners’ insurance. Usually, for homeowners’ insurance, your deductible is a set amount, such as $500 or $1,000.
For earthquake insurance, your deductible is usually a percentage of your home’s value. For example, your earthquake insurance deductible may be 5% or 10% (or up to 25%) of your home’s value. For example, if your home is valued at $200,000 and you have a 5% deductible, you’d be responsible for the first $10,000. Your insurance company would be responsible for the remaining damage.
That may seem like a big chunk of money to pay up front. But you’ll find it a lot cheaper to come up with $10,000 than the entire $200,000.
If you own a mobile home, your insurance policy may cover earthquake damage. It’s important to check with your agent to understand what is covered and what is not covered.
Not all insurance companies offer earthquake endorsements. Check with your insurance agent to see if it’s an option with your current carrier.
Our goal here is to protect your investment and manage risks. It’ll be worth your while discussing earthquake insurance with your agent so that you’ll know your options.