Earthquake insurance worth the cost? - Action News 5 - Memphis, Tennessee

Earthquake insurance, worth the cost?

By Keith Boles - bio | email feedback

JONESBORO, AR (KAIT) -It's been close to 200 years since there has been a major earthquake in Region 8.

On one hand it could happen tomorrow, on the other it may not happen for another 200 years.

So the question is, do you need earthquake insurance for your home..or is that a gamble you're willing to take?

Any kind of insurance is really a gamble.

When you purchase it, you're betting that you will need it....most of the time you *don't* but if you *do* suffer a loss, it's good to know that you are covered.

One big question to consider is cost. Could you afford major structure repairs to your house?

In other words you have a mortgage and then thousands more borrowed to make major repairs.

That should set the thinking wheels in motion. Another question..... Does my insurance company even offer earthquake insurance?

A huge disaster to the South of us changed a lot of companies policies...no pun intended. 

Ben Ford a Jonesboro State Farm Insurance Agent said that the massive payout's really killed off disaster insurance for many companies including earthquake coverage.

"Many companies got out of the earthquake business after Katrina hit. After the hurricane season. Because it was such a huge financial problem for so many insurance companies that they had a hard time paying it out."

 The companies may have to outsource coverage and make it a totally separate policy.

The area around here sits in the New Madrid Seismic Zone, a pretty good place to at least consider having earthquake insurance.

Ford, "We'd highly recommend it and I would encourage you to visit with your insurance agent to insure that you do have earthquake protection."

Granted we haven't had a major quake in almost 200 years but the potential is always there.

Ford, went on .."An earthquake is a huge risk around here. Not just on the insurance side but how the local communities and the state governments are going to respond when and if this happens. You say it happened 200 years ago and yes it did but seismic activity is recorded quite frequently around here."

Some may ask what's the point?

After a big quake all we will care about is surviving.

But that stage won't  last forever.

David Moore the local OEM Coordinator said, "We go from response to recovery. And once we get into the recovery mode then the insurance companies are going to come in on their own and start doing their thing."

But...before you decide to purchase the insurance you need to shop around.

Ford, "Earthquake insurance is available in this area but not every insurance company offers earthquake insurance."

Just like your homeowners policy there are a lot of factors that contribute to the cost of your earthquake policy such as the kind of home you have. How close the fire department is to your home. But the average cost Ford says could run anywhere from 70 dollars to up to around 275 dollars. That's with State Farm.

When shopping around ask if your prospective insurer makes the earthquake policy an add-on to your present homeowners policy or does it have to be a separate policy. That can drive up costs.

Ford, "When you compare your rates with different companies. Don't just look at the rates, look at the coverages again. Make sure your homeowner policy does carry a earthquake endorsement."

Most insurance policies carry a 10 percent deduction.

So that means you would receive 90% back on your home to rebuild.

Like I always say, you need to shop around for the best insurance fit for you and then decide if you need it, or not.

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