Wake up call!A significant tremor shook through the Saint Louis area on the morning of Friday, April 18th. Coming as it did in the early hours of the morning, 4:37 am to be exact, it woke many people from a sound sleep. For many it also roused them from a sleepy complacency about their homeowners insurance. Were they sufficiently covered, or did they even have earthquake coverage at all? Some homeowners are finding that they wrongly assumed they had coverage all along.
Standard homeowner and tenant insurance policies do not cover losses that result from earth movement. But you can obtain insurance protection through the purchase of an earthquake endorsement to your standard homeowner policy, if your current company provides such coverage.
Letting the dust settle
There is nothing like an earthquake or tremor to increase the awareness of the value of EQ covearge. However, when a significant earthquake does occur in an area, insurers in the earthquake market will declare a moratorium on binding new coverage. This is a stopgap measure taken against the sudden increase of adopted risk. The moratorium may last several days, or until the likelihood of damaging aftershocks has diminished. Issuing of earthquake insurance resumes once the threat of aftershocks has passed, with each company setting their own moratorium guidelines. You may still buy homeowners insurance with EQ coverage during this period but the earthquake endorsement will not be effective or binding until the moratorium is lifted.
EQ insurance is catastrophe coverage
Like catastrophic major medical insurance, earthquake insurance is primarily intended to cover major losses. It is typically sold with deductibles equaling 10 percent or more of the structure’s policy limit. So if your dwelling amount [Coverage A on your policy] is $200,000, your deductible or amount you would pay out of pocket would be $20,000. This limit works much like any other deductible. The result is that the insurance pays only for damages that exceed the deductible. Obviously this coverage is not intended to cover broken glass or knicknacks which fell from the shelf but only to provide a safety net in case of a truly significant and damaging event.
Which raises the question, is earthquake coverage right for you? Like all insurance decisions this is a matter of the cost weighed against the likelihood that a loss may occur and the likely economic result if it did. It is a rational yet personal decision each homeowner must weigh for him or her self. There isn’t one answer for everyone, but for most people their home is their major financial asset.
Is it available?
Earthquake coverage used to be both standard and cheap. Not so anymore. The trend among insurers in the Midwest earthquake zone is to to manage risk with higher deductibles and premiums or to restrict or drop earthquake coverage altogether. Many earthquake underwriting guidelines restrict coverage for older homes, two story brick or solid brick construction or homes built after a certain year. In a city like Saint Louis with a preponderance of large, older brick structures this can effect a significant number of homeowners.
While it has become harder to place these city homes in a market which provides earthquake protection, Crawford-Butz Insurance has several providers who still write older and solid brick homes, often at very competitive prices. If finding homeowners insurance with earthquake coverage has become a concern of yours since the recent tremors, call me. I'd be glad to discuss all the options with you and work to find you the coverage you need. Just call 314 752-2500 and ask for Larry. I'm ready to help.
