Insurance

Make Sure You're Covered if an Earthquake Strikes

Standard homeowners policies won't pay for damage due to earthquakes. Find out how to fill the holes in your coverage.

A 5.9 magnitude earthquake hit the East Coast today and could be felt in Washington, D.C., New York, Boston and to the west in Cleveland, Ohio. It's good reminder that disaster can strike anywhere at any time and that you should take steps now to be prepared. The first thing you should do is make sure you have enough insurance coverage to avoid being wiped out financially.

About 5,000 earthquakes strike each year, yet standard homeowners policies do not cover earthquake damage, according to the Insurance Information Institute (III). To get coverage, you'll need to add an endorsement to your existing policy or buy a separate earthquake policy, which is available from private insurers or the California Earthquake Authority if you live in that state.

The endorsement or policy will cover damage from shaking and cracking (damage from fire or water from broken pipes will be covered under your homeowners policy). Earthquake insurance rates will vary by area, insurer and type of structure being insured (brick homes are more costly to insure). Deductibles for these policies range from 2% to 20% of the replacement value of the home, according to III.

Even if you don't live in an earthquake-prone area, you might have gaps in your homeowners coverage that could leave you unprotected if another disaster, such as a flood, wildfire, major storm or tornado, were to strike. Most homeowners mistakenly think that their homeowners insurance covers more losses than it really does, according to a study by the National Association of Insurance Commissioners.

Among the types of damage not covered by a standard policy are flooding and sewage backup. And coverage for valuables, such as jewelry and antiques, and liability protection (if someone is injured at your home) is limited. Below are several articles with advice on how to fill the gaps in your coverage and prepare before disaster strikes.

QUIZ: Are You Covered?Learn what your insurance policies do -- and don't -- cover.

Upgrade Your Home InsuranceNearly two-thirds of homeowners are underinsured. Make sure you're not one of them.

Prepare for Storm Season With Flood CoverageYour homeowners policy won't pay for damage caused by rising water. Here's how to get the coverage you need.

Prepare Your Homeowners Insurance for Hurricane SeasonNow is the perfect time to review your coverage to make sure your home is protected.

Other steps to take

In addition to having adequate insurance coverage, you also need to make sure that you're prepared to file a claim and that you have enough cash to cover costs until your insurer reimburses you.

Take inventory. You need to know what you have in your home -- and the replacement value of those items -- so you can file an insurance claim. Take photos of possessions or videotape your home room by room. Store the proof on a CD or flash drive and put it in a safe place. See Tips to Help You File an Insurance Claim for more information. And to find out how insurers handle storm-damage claims, see Protection After the Storm.

Build an emergency fund. Set aside several thousand dollars in a money-market or savings account to cover potential out-of-pocket costs. Many common storm-related expenses -- such as removing fallen trees, which can cost thousands of dollars -- generally aren't covered unless the tree lands on your house.

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