Earthquake Coverage for Home and Business Owners

It is common for people to associate earthquakes with the state of California.  The San Andreas Fault is heavily studied by scientists and even has a Hollywood movie featuring the potential havoc it could cause the United States.  What people might not realize is that the largest earthquake to ever hit the lower 48 states actually occurred along the New Madrid Fault in 1811-1812.  The New Madrid Seismic Zone (NMSZ) is located in parts of Missouri, Arkansas, Tennessee, Kentucky and Illinois.  The earthquake of 1811-1812 was so strong that it caused the Mississippi River to flow backwards and shocks were felt as far away as New York.   Using soil analysis, carbon dating, and radiology, scientists have been able to predict that a major earthquake occurs along the New Madrid every 300-500 years.  Engineers and city officials along the NMSZ have already begun strengthening large buildings, bridges, and transportation routes to protect against this possible disaster looming in the future.   Yet, it is also important for individuals living in these areas to protect themselves financially for this possible disaster.   

A major earthquake could leave a person's home or business in ruins and their personal property destroyed.  One might assume that coverage for such a disaster could be found in a homeowners or commercial property insurance policy; however, that assumption is inaccurate.  The majority of personal and commercial property policies exclude earth movement.  Earth movement is described as: earthquakes, including tremors and aftershocks; landslide; mine subsidence; earth sinking.   

Insurance companies will allow insureds to purchase additional coverages , known as endorsements, to add coverages back to a policy that would otherwise have been excluded.  Adding the earthquake endorsement to a homeowners or commercial property policy gives coverage back to insureds for losses resulting from an earthquake.  The endorsement (CP10401012) will also give coverage for any shocks or tremors that occur within a certain specified time period.  If an insured has this endorsement on their policy, they will be subject to a deductible as is common with many other causes of loss.  Instead of having a specified dollar amount for the deductible, it is common to have a deductible percentage.  For example, if you have a deductible of 15% and your home has a coverage limit of $100,000, the total loss would be subject to a $15,000 deductible.  While this deductible might seem extremely high, it is certainly much better than being left with no coverage and having to pay $100,000 out of pocket to rebuild your home.  It is also important to note how the deductible applies may vary by company and policy type. 

The cost to add an earthquake endorsement is competitive for the coverage that is provided.  For example, an insured could pay as little as $60 per year for EQ coverage on a $200,000 home in a low EQ Zone.  It is encouraged that you contact your local agent to determine eligibility and pricing for this coverage.  Please note factors that can effect eligibility include:  type of building construction, number of stories, age of building, earthquake zone,  and current earthquake activity in the area, etc.  Please contact your local insurance agent today for more details!

Source: "Earthquake in the Heartland." Mega Disasters , season 1, episode 5, The History Channel, 20 June 2006. YouTube,
Source: Insurance Services Office, Inc. Commercial Property Forms. (CP 00 99 10 12 & CP 10 40 10 12). Homeowners Forms. (HO 00 03 05 11 & HO 04 54 05 11).

Lindsey Adams, CISR

Personal Lines Account Manager
Mike Keith Insurance
Warrensburg, MO

(Article Contributor)