Earthquake Insurance Coverage
An earthquake is a kind of natural event that can easily result in significant damage to both residential and commercial properties. Fortunately, that which is damaged or destroyed can be either repaired or rebuilt with the compensation that is provided from good earthquake insurance coverage. It is a specialized form of coverage that homeowners can purchase to protect them from losses that come from property loss or damage due to seismic activity.
Since certain parts of this country are more prone to quakes than others, coverage is sometime not even available in certain locales. The expense of such coverage is, in large part, determined by the probability that a tremblor can cause major damage to your abode. This type of insurance is dissimilar to a normal policy that covers personal belongings and real estate.
Earthquake insurance, in a nutshell, provides protection for the expense of repair or replacement of covered buildings and personal belongings damaged or destroyed due to an earthquake. It will not, however, cover losses due to other events, such as fire, floods, or weather. This type of insurance will likely have a large deductible that varies depending on the level of coverage obtained and, importantly, the location of the property that is being insured.
Those who live in an area that is prone to quakes, like certain parts of California, can purchase this insurance from a variety of insurance providers. The normal policy will cover structural damage and any damage or destruction of enlisted personal property. Normally the personal property pay outs for losses is set at a certain dollar amount as opposed to comprehensive coverage for all personal belongings. This is for reasons that personal items such as furniture will often get through a quake quite intact rather than like a fire or flood in which practically sustains damage. This aspect helps to keep costs down for both the policyholder and the insurance company too. Things like a big LED TV are far more likely to have damage in a quake, so insurance companies will usually determine the values of replacing these fragile personal belongings and then will set a fixed dollar amount of coverage for that part of the policy.
Earthquake insurance is normally provided based upon a property’s actual value. For instance, a $300,000 home may be insured for the full amount, certainly if it is found to be in a high-risk locale. In this instance however, the deductible is a pre-determined portion of the total coverage, usually around 15 percent. Usual exclusions include expensive jewelry and artworks, improvements done to landscaping, a swimming pool, and other buildings that are on the property such as a workshop or a detached garage. There are exceptions, but usually these will not be part of a common earthquake policy.
There are two types of earthquake insurance usually made available. The first is known as “single-limit” coverage that can cover the whole appraised value of the primary structure. Another type is a standard policy that provides similar coverage that the homeowner already has, with the exception now being that the property owner is protected from earthquakes as well the as the standard other coverages. A very important thing to remember is that there is a notable difference between paying a 15 percent deductible and having to pay the total out-of-pocket cost of the loss of property due to having no coverage at all! In conclusion, not purchasing good earthquake insurance can be very hazardous to your financial well-being if the unlikely event were to occur in which a major earthquake strikes in your location.
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