By Ryan Stueber April 23, 2019
If we do experience “The Big One” in our lifetime we can be certain of two things- Our lives will be severely disrupted and our Homeowners Insurance will not cover any damage caused by the earthquake. We can all take steps to prepare for a major earthquake but is it worth the additional cost to purchase Earthquake Insurance?
It is a personal choice to be sure but let’s take a look at the variables at play that will affect your decision.
What happens if an earthquake damages my home?
If your home is severely damaged by an earthquake and you cannot afford to make the repairs yourself, you will have a choice to make. You can continue paying your mortgage until funds are made available through FEMA to repair your home. Keep in mind that while funds may be secured within a few months, it may take years to actually rebuild do to shortages in labor and materials. Or you can choose to stop paying the mortgage and allow the bank to take the home back and deal with the damage. Some banks may also offer some type of mortgage relief option that allows you to keep the home until the damage can be repaired but that is not a guarantee.
If you have a significant amount of equity in your home this poses a significant dilemma. Do you keep paying the mortgage on a house you can’t use or do you risk the bank foreclosing and losing your hard earned equity?
What does Earthquake Insurance Cost?
Earthquake Insurance premiums are determined by three primary factors- The location of your house in relation to nearby fault zones, the age of your house, and the size of your home. For example, a 1930’s home in Tacoma might cost $800/ year while a similar sized house built in 2005 in Puyallup might only cost $400/year.
The premium will also vary by the type of coverage and deductible you choose. You can choose deductibles between 2.5% and 25% and can also choose between a comprehensive policy and a more basic policy that offers less coverage. Part Two of this blog will discuss the different coverage and deductible options in detail.
How Likely Are we to have a major earthquake in the Pacific Northwest?
There is an 87.79% chance of a major earthquake (magnitude 5 or above) in the Puget Sound area within the next 50 years, according to official estimates from the United States Geological Survey. So the risk is quite real. Whether it will happen in our lifetimes or not is something we just won’t know until it happens (or doesn’t).
Like most insurance, we hope to never need Earthquake coverage but we do bear the responsibility to protect our families and assets in the face of a natural disaster. For most of us it is at least worth finding out the cost of Earthquake Insurance so we can decide if it is worth the cost.
If you’re interested in protecting your home and your family from a potential earthquake, give us a call or request your online earthquake insurance quote today!