See Glen Curry’s first Earthquake blog for more information.
With the recent devastation in Japan and its far-reaching impact, including Tsunami Waves that hit the shores of the United States last week, we need to re-visit the home and auto insurance policies for determination of coverage.
All home insurance policies have exclusions for “earth movement”. This includes earthquake, land slide, mud slide, settling and cracking of the Earth. As such, I recommend an Earthquake Endorsement to cover Earthquakes. There are no endorsements available for land slide, mud slide or settling. So, in order for the coverage to apply in the Earthquake Endorsement, there must be a recorded shifting of the Earth from the Seismology Center.
Now, from an underwriting perspective, the pricing of the endorsement takes into account the following factors:
- How close is the property to a designated fault line? You may be thinking, here in Georgia we do not have much exposure to an Earthquake. The New Madrid fault line that runs through Missouri and parts of Western Tennessee is said to be a bigger concern than any fault line running through California. It just has not “shifted” yet to any great degree. Do a Google search on “Georgia Fault Line” and you will find there are several fault lines running through the state.
- Is the exterior of the house made of Frame or Masonry Veneer? Frame homes are not solid built homes, so they will move if blown by high wind or the Earth moves. Masonry Veneer homes are more solid and are much less likely to move. As such, the cost to insure for Earthquake is LESS expensive for a Frame home than a Masonry Veneer home for this reason. This is different from the pricing of a regular home policy. On a regular home policy, a Masonry Veneer home is less costly to insure due to its resistance to fire and high winds.
There are insurance companies in the state of Georgia that have ceased writing Earthquake insurance due to the facts mentioned in item #1 above.
They say animals can sense when an earthquake is about to happen, even though we as humans have no piece of equipment to warn us one is about to occur. I remember 5 or so years ago, my dogs woke up about 4:30 in the morning and began whining. This was unusual, but I turned them out into the back yard to go do their business. While standing at the kitchen sink drinking a glass of water, I felt a hard jolt and shaking of my house in Buford, Ga. At the time there was a rock quarry about 2 miles as the crow files from our house, and it was common during the day for them to blast and cause the house to shake. My thought was, “wow, they sure are blasting awfully early this morning.” I went back to bed after bringing the dogs in. The morning news at 7 AM had a lead story there had been a 3.5 aftershock that hit the metro Atlanta area. To this day, I believe my dogs knew something was about to happen!
Regarding a Tsunami, Reuters posted a recent article titled “Congress Eyes Flood Insurance Fix as Tsunami Nears” on their website. This is a very interesting read. I will not go into details, but a Flood Policy would cover water damage caused by a Tsunami, if you can get one.
I have been through aftershocks of 5.4 to 6.0 (refer to my blog from 10/4/10), and believe me, those are very powerful. For every tenth of a percentage point the number goes up on the Richter Scale, the magnitude increases by significant levels. I cannot imagine an 8.9 and what that felt like.
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