Should You Get Earthquake Insurance?
Earlier today, a 5.8-magnitude earthquake centered northwest of Richmond, Va., shook much of Washington, D.C., and was felt as far north as New York City and Rhode Island.
The quake sent hundreds of people spilling into the street a block from the White House, with other buildings evacuated in North Carolina. It is believed to be the most powerful earthquake to hit the D.C. area. There are also reports of significant damage to buildings in Fredericksburg VA. Folks all the way up in Clifton Park, New York reported seeing cars rocking on the highways and some business even evacuated their buildings in reaction to the tremors.
But many folks in the northeast regions are not as familiar with earth quakes as are folks who live in California. And as such, I don't think these folks give the matter of whether or not to buy earth quake insurance a second thought.
First things first: if you live in an area where earthquakes with the potential to damage property are a rare, if ever, occurrence, then it may never occur to you to even consider buying such insurance.
But if you live and own property in an area where damaging earthquakes happen on a regular basis, it's of course worth considering. And that includes a lot of homeowners! According to the U.S. Geological Survey, 39 states have experienced tremors in the last century, and among natural disasters, earthquakes are the most costly from which to recover. Also, 90 percent of Americans live in potential earthquake zones.
Many homeowners, however, still hold off on purchasing insurance; in California, only 12 percent of owners with homeowners' policies also have earthquake coverage.
Why? The main reasons appear to be denial and cost.
The average rate for a policy purchased with the California Earthquake Authority, a publicly-managed organization that provides Californians catastrophic residential earthquake insurance, is about $720 per year.
Another reason is high deductibles: many earthquake policies only pay for damage that exceeds 15 percent of the home's value and never more than the stated coverage amount in the policy.
Still, there can be a reason to purchase earthquake insurance, given their prevalence and cost. And if you haven't reviewed your home insurance in the past few years, you could be exposed to significant risk. Pull out your homeowner's policy, look up the limit for dwelling coverage, and ask this question: "Do I have the right types and enough coverage to rebuild my home?"
If you have the slightest doubt, then call your insurance company and ask them the same questions and get their answers.
More on CBSNews.com:
Quake and Hurricane Insurance: A Primer
5 Tips for Making Your Home More Earthquake Safe
