Shaking Out the Truth About Earthquake Coverage

Broken RoadIt has been estimated that 75 million Americans are exposed to a significant risk of earthquakes across 39 states, according to the U.S. Geological Survey. And this was before the fracking process began.

According to an article by the Insurance Information Institute, a combination of increasing urban development in seismically active areas and large numbers of older buildings that do not adhere to current building codes suggests the potential cost of an earthquake is likely to rise. In many parts of the country today, there’s also much discussion about “fracking” and its contribution to recent seismic activity. Fracking, or hydraulic fracturing, is the process of extracting natural gas from shale rock layers deep within the earth. Fracking makes it possible to reach natural gas trapped in the shale that was once unreachable with conventional drilling techniques. Although fracking has contributed to untold wealth for many landowners and natural gas companies, some say the technique has also contributed to increased seismic activity and earthquakes. The most recent studies have shown that fracking-induced earthquakes are far less hazardous than natural ones, but many homeowners are now examining their homeowners policies to determine if they are covered in the event of a quake.

What the homeowner will find is that most unendorsed homeowners policies exclude or have very little coverage for earth movement. Earth movement for the purposes of homeowners insurance encompasses earthquakes including land shock waves or tremors before, during, and after a volcanic eruption; landslides, mudslides, or mudflow; subsidence or sinkhole; or any other earth movement that includes sinking, rising, or shifting caused by an act of nature or otherwise.

So what should a homeowner do?  Contact your independent agent and request that earthquake coverage be endorsed onto your policy. These endorsements vary from company to company when it comes to price and coverage. Some will have deductibles separate from your homeowners policy deductibles. Most will have other exclusions such as masonry veneer, flood, and filling of land resulting from the earthquake. The cost of this coverage will vary based on many criteria about your home including location, cost, construction material, and age.

In addition to insurance, you can take other steps to fortify your home. Making a few, cost-effective home improvements such as securing cabinets and furnishings to walls, installing safety shutoff valves to gas lines, and bracing water heaters are just some of those steps. What other steps can you suggest to protect your home from earthquake damage?

4 Comments on “Shaking Out the Truth About Earthquake Coverage

  1. You speak of fracking and it’s direct influence on earth movement then you encourage adding an Earthquake endorsement. I think the big question right now as an agent is…will they have coverage with this endorsement if the earthquake is resolved to be cause from fracking?

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  2. Elizabeth…in reading this particular policy form, the definition of earthquake includes “earth movement….caused by an act of nature or otherwise”. Unless there is a specific exclusion for earth movment caused by fracking, my interpretation would be that the coverage would apply.

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  3. Thank you John!! We encourage all insureds to consider earhquake coverage when assessing their insurance needs.

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