Earthquake Insurance Could Be the Answer For Some Homeowners

Earthquakes have occurred in 39 states this century. Although 90 percent of Americans live in areas considered seismically active, only a small fraction purchase earthquake insurance.

The 1994 Northridge earthquake in California reaffirmed this fact after parts of Nevada were also jolted by the 6.8 tremblor. In anticipation of the next major earthquake, Nevadans have been busy developing and testing emergency disaster plans and stocking their earthquake kits with extra food, water, batteries and other essential items for survival.

Aside from being physically prepared for the an earthquake, homeowners should also be financially prepared. For some people, this may mean purchasing earthquake insurance to help cover their losses and help them recover quickly. Remember, earthquake insurance is not covered under a standard homeowners policy. Without earthquake insurance, you will have to finance all the losses to your home and possessions by yourself or rely on the federal government for assistance.

To help you decide whether or not you need earthquake insurance, first ask yourself this question: How much of a financial investment could I stand to lose if a major earthquake were to damage my home and possessions? The Insurance Information Network of California encourages homeowners to consider the following:

• The likelihood of an earthquake occurring in your area.
  
• Is your home close to an active fault?
  
• What is the nature of the ground under the dwelling? For example, you're at higher risk if the soil is sandy or loose or if you live on a fill area.
  
• Is your home a single-story, two-story or multi-level?
  
• Are the walls and foundations properly braced?
  
• Is your home of wood-frame construction, stone or brick?
  
• The age of your home. Older homes are at higher risks for damages.
  

If you ultimately decide to purchase earthquake insurance, remember that you should buy enough to cover the costs of totally rebuilding your home. The amount of insurance you buy should be based on replacement and reconstruction costs, not the fair market value of your property and possessions. Your premiums will depend on where you live (premiums vary according to proximity to fault lines) and the type of home you have (wood frame or brick).