Earthquake Damage May be Costly for Homeowners

03/2/2010

Recent record-breaking earthquakes may have served as a reminder for American homeowners to insure their property.

The Insurance Information Institute recently discussed some of the insurance issues that arise from earthquake damage, which is usually not covered by home insurance policies. These disasters can strike any time during the year and may lead to fires, avalanches, landslides and more.

"Coverage is usually available for earthquake damage in the form of an endorsement to a home or business insurance policy," the institute said. "However, insurers that don't sell earthquake insurance may still be impacted by these catastrophes due to losses from fire following a quake."

Business insurance policies may cover losses related to business interruption.

Earthquakes can strike any time of the year and have led to damage in all 50 states, according to the III. One of the most expensive in America's history hit San Francisco in 1906 and led to $235 million in insured losses. This is $5.8 billion in 2008 dollars.

Urban development in seismic areas has increased the potential losses from earthquakes, according to the III. Older buildings that have not been upgraded to current building codes can also contribute to higher losses.

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