Earthquakes and California go together. Or at least that’s what most of the country thought until Tuesday’s East Coast earthquake centered in Virginia.

Reports of the earth moving were widespread, coming from New York, Massachusetts, Vermont, and Georgia. Even a few came from as far away as Chicago.

Although no news of significant damage emerged, such a widespread impact raises questions about preparedness and insurance coverage. That’s because earthquake damage is not covered under standard homeowners or business insurance policies.

These policies typically exclude damage from earth movement such as earthquakes and sinkholes. However, it is common for property insurance to cover a fire that might be the result of an earthquake. Homeowners should read know the exclusions in their policies.

About 5,000 earthquakes a year occur in the United States, according to the Insurance Information Institute. Quakes of various magnitudes have occurred in 39 states since 1900 and damage has been recorded in all 50 states.

Coverage for earthquake damages can be purchased as a rider to existing property insurance. Many insurers offer an earthquake damage rider. Or it’s available as a supplemental policy.

Although it’s widely available, most property owners do not buy earthquake coverage. Even in earthquake prone California, just 12 percent of homeowners have policies, Hackett said. The national average is even lower.

The cost of earthquake insurance varies depending on location, the type of building and its age. Older buildings cost more to insure as do those made of brick. Wood frame structures withstand quakes better, therefore cost less to insure.

A wood-frame home in Washington state might cost between $1 and $3 per $1,000 worth of coverage, while insurance may cost less than 50 cents per $1,000 on the East Coast, according to the III.

Insuring a brick home could cost from $3 to $15 per $1,000 in the Pacific Northwest and between 60 and 90 cents per $1,000 for coverage in New York.

Like other insurance policies, earthquake coverage carries a deductible. That means the homeowner must pay for portion of the damages before the insurance policy covers the rest.

Deductibles range from 2 percent to 20 percent of the replacement value of the structure. If a home costs $100,000 to rebuild, the homeowner would have to pay the first $2,000 for a 2 percent deductible.

States like Washington, Nevada and Utah, with higher than average earthquake risks, often have a 10 percent deductible. Property owners can often lower the annual premium by agreeing to a higher deductible.

Those who own a unit in a condominium can ask their insurer for earthquake coverage that would pay for losses if the building is damaged and the owners are asked to share in the cost of repair.

Renters also have options. They can buy coverage that will protect their personal property and pay for living expenses if their building were to be rendered uninhabitable.

Because earthquake damages can be so complete, it’s important for insureds to keep an inventory of their belongings, especially of major appliances and furnishings. Many homeowners choose to make a video record of the rooms of their home, showing their furniture, televisions and appliances.

There is a bright spot that most drivers may not be aware of. Cars with comprehensive insurance policies are covered for damage from an earthquake.

An earthquake may seem like remote possibility, but now is a good time for property owners to review their coverage and keep in mind that the most costly single earthquake in the U.S. was not in California, but centered in the Midwest near New Madrid, Mo. The 1812 quake measured 7.7 in magnitude and caused $100 billion in damage when measured in terms of current economic and demographic conditions.

 

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Earthquake Premiums by State:

An East Coast earthquake? Suffering damage from a seismic shift isn’t a risk many homeowners outside of California worry about.

Most standard homeowners, renters and business insurance policies do not cover damage from earthquakes — specifically, the potential losses from the shaking and cracking that can destroy a building and other property.

Nationwide, earthquake premiums written total $2,468,141,000 according to 2009 figures. Here’s a look at the extent to which individuals and businesses have purchased additional earthquake insurance protection. The figures include insurance written by state funds.

Rank State Direct premiums written in 2009 (thousands)
•1. California $1,584,897
•2. Washington state 134,970
•3. Missouri 88,542
•4. Tennessee 59,612
•5. Oregon 53,777
•6. Illinois 49,999
•7. Kentucky 35,141
•8. Florida 31,645
•9. Indiana 31,161
•10. South Carolina 30,515
•11. Texas 30,264
•12. New York 29,825
•13. Utah 29,121
•14. Ohio 26,665
•15. Alaska 20,840
•16. Arkansas 19,113
•17. Mississippi 17,851
•18. Nevada 17,708
•19. Massachusetts 15,207
•20. Georgia 13,713
•21. Pennsylvania 13,303
•22. New Jersey 12,417
•23. Virginia 10,013
•24. North Carolina 9,053
•25. Louisiana 8,430
•26. Colorado 8,351
•27. Hawaii 7,878
•28. Alabama 7,238
•29. Arizona 6,774
•30. Maryland 6,559
•31. Michigan 6,265
•32. Kansas 5,564
•33. Connecticut 5,140
•34. Oklahoma 4,845
•35. Minnesota 4,242
•36. Wisconsin 3,796
•37. Iowa 3,629
•38. Montana 3,460
•39. Wyoming 2,902
•40. Nebraska 2,385
•41. Idaho 2,372
•42. Rhode Island 2,218
•43. New Hampshire 2,217
•44. New Mexico 1,857
•45. Washington, D.C. 1,782
•46. Maine 1,428
•47. West Virginia 1,352
•48. Vermont 860
•49. Delaware 747
•50. South Dakota 440
•51. North Dakota 329