Be Financially Prepared Before an Earthquake Strikes
February is Earthquake Awareness Month. Earthquakes frequently occur in Tennessee because of our two seismic zones – the New Madrid Seismic Zone and the East Tennessee Seismic Zone. While most earthquakes that occur in Tennessee are small, scientists estimate that there is a 25-40% probability of a magnitude of 6.0 or greater occurring in the central U.S. within a 50-year window. Overall, about 200 earthquakes occur in the central U.S. every year, many of which go unnoticed. While earthquakes most often occur with little to no warning, there are steps you can take to protect yourself and your family now. This month, I ask that Tennesseans prioritize earthquake preparedness before a disaster strikes in order to reduce their vulnerability.
Practicing helps so that you and your loved ones are ready to respond when this occurs. If you are outdoors when the shaking starts, you should find a clear spot away from buildings, trees, streetlights and power lines. Then follow the steps of drop, cover and hold on, and stay in that position until the shaking stops while remembering that often aftershocks will follow the initial earthquake. If you are driving when the shaking begins, pull over to a clear location, stop and stay there with your seatbelt fastened until the shaking stops. Take the time today to identify safe places inside your home, office or school so that when the shaking starts you can respond quickly. Common items to seek shelter under include a desk, dining room table or another sturdy piece of furniture or against an interior wall or doorframe. Consider protecting your home by safely securing heavy items in your home like bookcases, refrigerators, televisions and objects that hang on walls.
Now is the time to also consider obtaining an earthquake insurance policy. A standard homeowners insurance policy does not cover earthquake damage. Your home is insured for earthquake damage only if you have added an endorsement to your policy or bought a separate earthquake policy. A homeowners policy and earthquake insurance do not overlap, but work together to give your home additional insurance protection. Having specific earthquake insurance that covers the hazards your home would face in this event can give you peace of mind and help protect your belongings. I urge consumers to prepare for the potential financial impacts by learning more about their earthquake insurance options so that they have adequate coverage and are well prepared for the risk that earthquakes bring. Earthquake insurance is available to purchase in Tennessee from licensed insurance producers.
When you shop for an earthquake policy, do not forget about the deductible. A deductible is the amount the homeowner is responsible for paying on each claim. The deductible for earthquake insurance is typically 10% to 20% of the coverage limit. For example, if your home is insured for $200,000 a 10% deductible would be $20,000 and depending on the policy, there may be separate deductibles. Your home, your belongings and outside structures like detached garages and fences may all have individual deductibles, so make sure you know your policy. Additionally, some policies may pay up to the total of one or more of the coverage limits if the damage is more than the coverage limit. Always check with your insurance agent to learn how the deductible may work for your earthquake coverage.
No matter what policies you need, staying organized before a disaster can also help you be prepared. Keeping important insurance documents handy will help keep you organized in the event of a disaster. Be sure to keep physical copies and digital backup copies of your policies. Additionally, making a home inventory is also an easy way to prepare in case anything happens. With a home inventory, your claim can be handled more quickly and easily. A home inventory can also help you better understand how much coverage you actually need.
Waiting until after an earthquake to buy insurance is never a good idea. First, you cannot buy insurance to cover damage that’s already happened. Second, after an earthquake, insurers likely will not sell coverage for some period of time and when they do, premiums may be higher. Also, think about how you would manage the costs to recover from an earthquake. Without insurance, how would you pay to repair or rebuild your home? How would you pay the costs to live somewhere else while your home is being repaired or rebuilt? Earthquake insurance can help with all of these costs and factors.
What your earthquake insurance does not cover varies by the insurance company. Review your earthquake coverage and declarations page to learn what the exclusions are. Earthquake insurance usually will not cover anything your homeowners insurance policy already covers. It will not, for instance, cover fire damage to your home – even if the fire started because an earthquake ruptured a gas line. Additionally, earthquake insurance doesn’t cover damage to your vehicles. Lastly, it will not cover your pre-existing damage that was there before the earthquake occurred.
For more information on earthquake safety read our press release here. To contact our insurance division go to our website at www.tn.gov/commerce/insurance-division.
Bill Huddleston serves as the Assistant Commissioner of the Insurance at the Tennessee Department of Commerce and Insurance.