Jan. 18-- Dear Action Line: With earthquakes more frequent in Oklahoma, is it advised to have "earthquake" added to hazards covered by homeowners' insurance? -- E. McG., Broken Arrow.
The latest tremblor was Jan. 1, 2013, at 5:30 a.m. -- a 2.8 magnitude quake -- 6 miles northeast of Loco. (150 miles southwest of Tulsa). No injuries or damages were reported, said the U.S. Geological Survey.
Oklahoma Insurance Commissioner John D. Doak said this is "a good reminder to review homeowners' and renters' insurance policies and consider buying earthquake insurance. We had a significant number of earthquakes last year, reinforcing the seriousness of adding earthquake coverage," Doak said.
Earthquake damage is not covered by "standard homeowners' insurance policies" but earthquake insurance can be purchased either separately and independent of your homeowners insurance, or acquired as an "endorsement" of additional coverage under your existing homeowners policy.
Brick homes, wood frame homes with crawl spaces and multi-story homes are the most likely to suffer serious earthquake damage. Have a qualified structural engineer assess your home's risk, said the National Association of Insurance Commissioners.
Earthquake insurance covers needed repairs to your house and other structures not attached to it, if you pay to include them in the policy. It can cover increased repair costs you face meeting current building codes and to stabilize the land under your home. It can pay extra living expenses while repairs proceed and debris removal costs, if you pay extra for all this.
"Masonry cracking" is likely to require expensive repairs when it's time to sell your home. The rub with earthquake insurance is it is expensive and comes with high deductibles. A "deductible" is the portion of a claim not covered by the insurance policy that the policy holder must pay before the claim can be processed. It can be 5 percent to 15 percent of the policy amount.
The cheapest earthquake policies carry the highest deductibles: $100 to $150 per year to replace a $200,000 home destroyed by an earthquake has a deductible of 15 percent of the home's "overall policy limit" ($30,000). When brick is cracked enough to reduce the home's salability the insurance company will still probably pay only for cosmetic repairs and not for "full removal and rebricking." Such repairs are not likely to exceed $30,000.
The largest earthquake in Oklahoma history was Nov. 6, 2011, at magnitude 5.6 -- 4 miles east of Sparks and 48 miles southwest of downtown Tulsa. It caused brick structural cracking here to dozens of homes and businesses. But fewer than one percent of Oklahomans carry earthquake insurance.
The National Association of Insurance Commissioners notes 90 percent of Americans live in areas that experience occasional tremors and 95 earthquakes with magnitudes of 1.8 or greater were reported in Oklahoma in 2012.
"Oklahoma is at risk for earthquakes, with parts of the state considered at moderate risk," Doak continued. "Oklahoma Emergency Management has reported an increase in earthquakes in Oklahoma in the past two years. Not only can earthquakes generate a great deal of damage to your property, but also cause a great deal of damage to your personal finances if you're not sufficiently covered."
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