Earthquake Insurance

Although standard homeowners policies don't include coverage for earthquake damage, you should be able to buy a special earthquake endorsement with your policy or get a separate policy.

Unfortunately, cost deters most owners from even taking out earthquake insurance. And that in turn makes coverage more expensive because the risk is being carried by a smaller pool of individuals. In California, for example, where one-fourth of the homes have earthquake insurance, an earthquake endorsement usually starts at $2.40 per $1,000 of coverage, depending on the home's construction. Wood-frame houses cost significantly less to insure than brick homes.

Since the 1994 earthquake in Northridge, Cal., insurers have backed away from earthquake coverage. Availability and cost have become problems, and deductibles have increased to 15% to 25% of the policy amount (or $15,000 to $25,000 on a $100,000 policy).

California isn't the only part of the country where homeowners are at risk for earthquakes. Homes situated in parts of Arkansas, Colorado, Idaho, Illinois, Indiana, Kentucky, Massachusetts, Mississippi, Missouri, Nevada, New York, South Carolina, Tennessee, Utah, Washington and Wyoming are also at higher-than-average risk. If you have difficulty obtaining earthquake coverage, call your state insurance department for assistance.

Earthquake insurance pays off only on devastating claims and it will not shield you from having to absorb a major financial loss. In addition, the deductible usually applies separately to the structure and its contents.

Despite the cost, it's important to consider buying earthquake insurance if:

■ Your home was constructed before World War II, when codes covering a structure's ability to withstand shifts in the earth were weaker; this is particularly important for homes not framed with wood.

■ Your home is located within ten miles of a fault.

■ Your home is on unstable soil, such as a hillside, landfill or flood-control plain.

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