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In the United States about 5,000 quakes strike each year. Since 1900, earthquakes have occurred in 39 states and caused damage in all 50. One of the worst catastrophes in U.S. history, the San Francisco Earthquake of 1906, would have caused insured losses of $96 billion, were the quake to hit under current economic and demographic conditions, according to AIR Worldwide.��

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The United States was the site of two severe earthquakes in the second half of 2011. A had its epicenter in Virginia and was felt there, as well as in numerous other East Coast states, on August 23, 2011. Meanwhile, Oklahoma incurred on November 6, 2011, a , one of the most intense in that state’s history.��

While there has not been a truly significant quake on the U.S. mainland since Northridge in 1994, it is only a matter of time.��

Earthquakes and Insurance

Earthquake coverage in Mexico is given by special endorsement and is subject to a 72-hour clause. Excluded from the cover are foundations, garden walls, patios, swimming pools and the like but these may be included by special arrangement. Fire following earthquake is covered by the basic fire policy. The large multinational risks are covered against earthquake in almost all cases; the larger local industrial risks in some 70 percent to 80 percent of cases; and other risks take the cover in between 50 percent and 60 percent of property policies. It is said, however, that many people decline to buy earthquake cover not only because they consider the cost to be prohibitive, but also on the assumption that as “the big one” occurred in 1985 it should be many years before there is another such event. Sums insured are the same as for fire, although first loss policies are permitted. Self-insured percentages of between 10 percent and 30 percent are imposed, depending on the zone.

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In the U.S., standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available either in the form of an endorsement or as a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is generally provided by standard homeowners and renters insurance policies.

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Earthquake coverage is available in the U.S. from private insurance companies. In California, homeowners can also get coverage from the (CEA), a privately funded, publicly managed organization. Only about 12 percent of California residents currently have earthquake coverage, down from about 30 percent in 1996, two years after the Northridge, California, earthquake. Nationwide 86 percent to 90 percent of U.S. homeowners lack earthquake coverage, according to A.M. Best.

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Earthquake insurance policies in the U.S. often carry a deductible, generally in the form of a percentage rather than a dollar amount. Deductibles can range anywhere from 2 percent to 20 percent of the replacement value of the insured structure. This means that if it costs $100,000 to rebuild a home and the policy had a 2 percent deductible, the policyholder would be responsible for paying the first $2,000. Earthquake insurance premium rates are determined differently by each insurance company and can vary widely depending on several factors, such as the location of the building and the construction materials used. Cars and other vehicles are covered for earthquake damage under the optional comprehensive portion of an auto insurance policy.

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The insurance association, the (AMIS), publishes statistics for earthquakes and other natural disasters.

U.S. Facts and Statistics: Earthquakes Issues Update: Earthquakes: Risk and Insurance Issues White Paper: California Earthquake Authority

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