Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
NEW YORK, March 20 -- The Insurance Information Institute issued the following news release:
Today's earthquake in Mexico is an important reminder to consumers to contact their insurance representative to make sure they have the right type and amount of insurance, according to the Insurance Information Institute (I.I.I.).
The potential cost of earthquakes in the U.S. has been growing because of increased urban development in seismically active areas and the vulnerability of older structures which, in some cities, may not have been built or upgraded to current building codes.
California has been the site of the most severe earthquakes in U.S. history but few residential or commercial properties in that state are insured for most earthquake-caused damages.
Since 1900, earthquakes have occurred in 39 U.S. states and caused damage in all 50. Last year, for instance, a series of minor quakes struck Arkansas, including a 4.7 magnitude temblor--the most severe in that state in 35 years--on February 27. And, on August 23, a 5.8-magnitude earthquake in Virginia was felt across the East Coast. Meanwhile, Oklahoma incurred a 5.6-magnitude earthquake, one of the most intense in that state's history, on November 6, 2011.
Going back even further, the 1994 6.7 magnitude Northridge, California, earthquake and the 1989 6.9 magnitude Loma Prieta quake in northern California, were the two most costly earthquakes in U.S. history as defined by insured losses. Northridge caused $15.3 billion in insured losses when it occurred 18 years ago, a sum equal to $22.5 billion in 2010 dollars, according to the I.I.I.'s calculations. Loma Prieta caused $960 million in insured losses in 1989, a figure equal to about $1.7 billion in 2010 dollars.
While there has not been a truly significant quake on the U.S. mainland since Northridge more than 18 years ago, it is only a matter of time.
EARTHQUAKES AND INSURANCE
Standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available either in the form of an endorsement or as a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is generally provided by standard homeowners and renters insurance policies.
Earthquake coverage is available from private insurance companies. In California, homeowners can also get coverage from theCalifornia Earthquake Authority (CEA), a privately funded, publicly managed organization. Only about 12 percent of California residents currently have earthquake coverage, down from over 30 percent in 1996, two years after the Northridge, California earthquake.
Earthquake insurance policies often carry a deductible, generally in the form of a percentage rather than a dollar amount. Deductibles can range anywhere from 2 percent to 20 percent of the replacement value of the insured structure. This means that if it costs $100,000 to rebuild a home and the policy had a 2 percent deductible, the policyholder would be responsible for paying the first $2,000.
Earthquake insurance premium rates are determined differently by each insurance company and can vary widely depending on several factors, such as the location of the building and the construction materials used.
Cars and other vehicles are covered for earthquake damage under the optional comprehensive portion of an auto insurance policy.
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