Earthquake Insurance, Do You Really Need It?

September 2, 2014

Earthquake Insurance, Do You Really Need It?

Earthquakes are one of those catastrophes that we hope to never experience; however, once you are in the midst of recovering from such an occurrence the cost can be enormous.

The earthquake that struck Napa, California just days ago will lead to economic losses of as much as $4 billion, fueled by damaged wineries and shuttered businesses that rely on tourists.  Insurers will probably cover about $2.1 billion, according to an estimate from Kinetic Analysis Corp., which projected total losses of about twice that sum. Costs borne by the industry may be limited because many homeowners don’t have earthquake coverage, according to the Insurance Information Institute.

In the Napa quake more than a hundred people were injured, six mobile homes burned to the ground, and about a hundred buildings were damaged sufficiently as to be unfit to enter.   Many more homeowners suffered apparently minor damage to their homes but had the contents of their homes seriously jumbled up.

This recent quake may be easy to dismiss if you live outside the West Coast, but it should prompt homeowners coast-to-coast to check their risk to determine whether earthquake insurance is warranted, because the threat may be greater than you think, in the wake of recent updates in government seismic risk maps.

While all states have some level of earthquake risk, the U.S. Geological Survey has identified 42 states that have a reasonable chance of experiencing damaging ground shaking from an earthquake over a 50-year period and 16 states that have a relatively high likelihood plus a history of earthquakes of magnitude 6 or greater, including California, Hawaii, Missouri, Oregon, South Carolina, Tennessee, and Washington.

Earlier this summer, the USGS updated its seismic risk maps based on the latest understanding and research on these phenomena, and found potential for bigger and more damaging quakes than previously believed on the East Coast (particularly near Charleston, S.C.), in the New Madrid, Mo., area, and on the already highly active West Coast.

Also, a new U.S. Geological Survey report indicates a slightly greater earthquake hazard in the Greater Yellowstone region of Wyoming, Montana and Idaho than previously thought, University of Utah geophysicist Bob Smith says.   “It’s an area of well-above-normal earthquake hazard,” Smith said. “And now with all the population going in – all the new roads and dams – also high risk.”

Check out the risk in your area.  We can help you better understand your risks and help you manage the short application process. Call us today. The Armstrong Company Insurance Consultants knows earthquake insurance, and we service clients all across the country.  As an independent insurance broker, we take pride in reviewing your options with multiple, A+ rated insurance companies and comparing protection and prices to find the best value for your business.