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CHICAGO, Feb. 5 -- The Property Casualty Insurers Association of America issued the following news release:
Although earthquakes often do not come to mind when one thinks of the Midwest and South, it is actually one of the most volatile seismic zones in America. That is why the Property Casualty Insurers Association of America (PCI) urges Americans to participate in "Great Shakeout" earthquake drills Thursday across the central United States.
Thursday's "Great Shakeout" takes place in Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, Oklahoma and Tennessee. Details can be found on the Web at: http://www.shakeout.org/centralus/.
"Individuals, businesses, and schools across the country should use the Great Shakeout as an opportunity to test lifesaving earthquake preparedness skills," said Christopher Hackett, PCI director of personal lines policy. "It is also a great reminder that we should also test our financial preparedness by considering the risk our homes or businesses face in the event of an earthquake."
PCI encourages everyone to be prepared for earthquakes, the least predictable of potential natural disasters. With population growth in areas of intense seismic activity, the risk of catastrophic loss of life and property damage continues to rapidly increase. According to the Federal Emergency Management Agency (FEMA), it is estimated that a major earthquake in a highly populated area of the United States could cause upwards of $200 billion in losses. Despite facing this major risk, many Americans do not purchase earthquake insurance. For example, even in earthquake-prone California, only 12 percent of homeowners purchase earthquake insurance.
"The region participating in the Great Shakeout on Thursday was the site of a series of some the largest recorded earthquakes in U.S. history, the New Madrid, Mo., earthquake and aftershocks of 1811-12," Hackett said. "The seismic activity was so great that it caused minor damage as far away as Washington, D.C., and reportedly caused church bells to ring as far east as Boston."
The area was sparsely populated at the time of the New Madrid quakes, but according to a Federal Emergency Management Agency (FEMA)-funded study by the Mid-America Earthquake Center at the University of Illinois, a similar event today would cause nearly $300 billion in damages, displace 7.2 million people and cause about 86,000 casualties. And although there hasn't been an event of that magnitude since, seismic activity demonstrates the region's earthquake threat remains active.
"The New Madrid seismic zone and surrounding areas remain an active earthquake threat. Earthquakes in Oklahoma in 2011 registered 4.6 and 5.7 on the Richter scale, and the Center for Earthquake Research and Information at the University of Memphis has recorded nearly four dozen minor quakes in the region, ranging from 0.4 to 4.1 on the Richter scale, since Jan. 1st," Hackett said.
Despite the ongoing threat, many people don't realize that earthquake coverage is not included in a typical homeowners insurance policy. Homeowners in earthquake prone areas need to consider their risk and consider buying this additional coverage to protect their most expensive asset - their home."
The standard homeowners policy does not cover losses that result from earthquakes due to the unpredictability and widespread catastrophic nature of these events. In addition, it is important to note the standard homeowners policy also does not cover landslides, mud slides or sink holes. Coverage is generally available as an endorsement to the homeowners policy or under a separate policy.
Earthquake insurance is designed to provide coverage for catastrophe losses. Consumers are protected from the damage caused by the shaking that results from the movement of the earth. The deductible for earthquake insurance varies based on the policy and the insurer. These deductibles are generally based on a percentage of the replacement value of the home. The deductible can range from two to 25 percent of the home's replacement value. In California, the standard deductible is 15 percent. However, for an additional fee consumers can now lower their deductible to 10 percent and raise the limits for contents and loss of use to $100,000 and $15,000 respectively.
"Earthquakes are a risk from Alaska to Maine," said Hackett. "We hear a lot of reminders to prepare physically for earthquakes including storing food and water, bracing water heaters and booksAriales, but it is equally important to talk to your agent or insurance company and assess your financial risk."
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