With all of the attention on Haiti the last few days and the powerful destructive capabilities of an earthquake, it’s probably worth asking the question whether you should buy earthquake insurance. For years I questioned whether we should have the insurance and I felt as if I was living on the edge a bit. For those of you that haven’t spent much time reading through your insurance policies, it’s almost unheard of for an insurance company to cover losses from an earthquake as part of your standard homeowners insurance. Both earthquakes and floods are usually explicitly excluded from homeowners policies.
What would happen if we had a major earthquake that caused significant damage to our home? Where would we live? Could we afford to rebuild? How much of a blow would it be to our finances?
After going through the ugly answers to each of these questions, I did some homework and decided that, for us, it was too risky not to have earthquake insurance.
I looked around and found very few options for earthquake insurance. We ended up going through a company called Geovera. The deductible on this policy is very high. If we were to have a catastrophic earthquake we would be on the hook for $49,500 before the policy would start paying. What does it cost for something like this? For us it’s $368 per year. This policy is not meant to pay out for a light shaking that cracks some sheetrock in the house, instead it’s designed to cover only a very large loss. Since I live in the Pacific Northwest and we have a MASSIVE fault line just off the coast, it feels like a good policy to have. The experts believe our area is due for a strong earthquake due to the fault lines in the area and the fact that we haven’t had a major earthquake in many decades.
Geovera is rated as an A- for financial strength so I’m hopeful that they would be able to cover our losses in the event of a major disaster.
If you live in an area that’s prone to earthquakes, have you considered getting earthquake insurance? What would you do if your house was destroyed like many of the structures in Haiti?