Definition of "Earthquake insurance"

Mike Canary real estate agent

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Earthquake insurance is the type of insurance policy that specifically covers damages to your real estate caused by seismic activities.

It can refer both to the rare coverage against earthquakes that a very comprehensive homeowner’s insurance policy covers, and to a separate more comprehensive policy indemnifying exclusively damages caused by an earthquake or volcano eruption. That’s right: there’s actually no such thing as a volcano insurance or lava flow insurance. Because volcanoes are activated by the same principle of “ground” moving, coverage for its damages sometimes can fall under the same category of Earthquake insurance.

Damage claims can be filed for each earthquake and related shocks occurring more than 72 hours after the initial shock, and while earthquakes can cause fire, floods, explosions and tidal waves, typically the earthquake insurance does not cover losses from fires, floods, explosions, or tidal waves. Just whatever direct damage the house got by shaking and making things fall within it and inside of it.

The reason why earthquake insurance is not typically covered as an act of god on homeowner’s insurance – and when it is, it’s usually not that good - is that, like flood insurance, the risk management is too complicated. Imagine if the same company has several houses in an area that gets badly hit by an earthquake? Will the insurance company have the resources to indemnify all of the houses? It’s very different from theft, for instance. While an area might be all around dangerous, the thieve will hardly, in one strike, break into all of the homes of a street at once. The movie “Home Alone” proves our point.

But you’re not an earthquake insurance company, are you? You’re probably a homeowner asking yourself: “Do I need an earthquake insurance policy? Do I need flood insurance? Oh my God, what do I need to fully protect my home?!”

You don’t need earthquake insurance if you live in areas that are unfazed by tectonic plates. There’s no need for it in Florida and most of the east coast. However, it might be interesting to get them if you live in Washington, Utah, Montana, Arizona, Texas, Colorado and even New Mexico, and you definitely need earthquake insurance if you live in Alaska, California, Hawaii, Nevada, Washington, Idaho and Wyoming.

Which state has the most earthquakes?

For reference in answering if you need earthquake insurance here is the number of strong earthquakes in each state from 1974 to 2003:

  1. Alaska - 12,053
  2. California - 4,895
  3. Hawaii - 1,533
  4. Nevada - 778
  5. Washington - 424
  6. Idaho - 404
  7. Wyoming - 217
  8. Montana - 186
  9. Utah - 139
  10. Oregon - 73
  11. New Mexico - 38
  12. Arkansas - 34
  13. Arizona -  32
  14. Colorado - 24
  15. Tennessee - 22
  16. Missouri - 21
  17. Texas - 20
  18. Illinois and Oklahoma - 17
  19. Maine and New York - 16
  20. Alabama and Kentucky - 15
  21. South Carolina, South Dakota and Virginia - 10
  22. Nebraska and Ohio - 8
  23. Georgia - 7
  24. Indiana, New Hampshire and Pennsylvania - 6
  25. North Carolina - 3
  26. Massachusetts, Michigan, Minnesota and New Jersey - 2
  27. Louisiana, Rhode Island and West Virginia - 1
  28. Connecticut, Delaware, Florida, Iowa, Maryland, North Dakota, Vermont and Wisconsin - 0

(Ranking from the Statista website. See the whole study here)

Real Estate Advice:

Do you live in an earthquake prone area? If you don’t, you still might be eligible for another natural disaster. America is so democratic that all possible natural disasters occur in this blessed land. Take a look at our worst cities for natural disasters article to find what is the hazard most likely to strike your area!

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