Earthquake is one of nature’s many disasters. Due to the movement of tectonic plates at the edges, a tremendous amount of energy is released in the form of a wave. This energy release has a physical significance, which we know as an earthquake.
Earthquakes in Utah are widespread, and our researchers say there have been some recent occurrences due to many reasons that scale up to a significant magnitude on Richter Scale.
This natural disaster significantly damages living things, from destroying homes to costing many human lives. Having an earthquake might cover some of the damage. Is earthquake insurance worth it in Utah? Read this article thoroughly to find the answer!
More About: An Insurance Policy
Earthquake Insurance- Why Do We Need It?
Utah stands on the major tectonic plates fault line, known as the Wasatch fault line. Due to the mismatch of this fault line, several major quakes over the years cost so many lives and destroyed numerous homelands.
On top of that, one of the significant side effects of an earthquake is Tsunami. As Utah is 700 miles from the nearest ocean, the chance of a major Tsunami is just a matter of time. Due to the earthquake, there is a misalignment in the sea level, leading to this aquatic disaster.
Furthermore, if you have enrolled in a home insurance plan for your home property, let us clarify that particular home insurance will not cover your earthquake disaster.
There are several refugee camps in Utah for the victims to take shelter during a major quake. But, once all these disasters are over, you will not have a roof over your head. At that time, covering all the renovations will be expensive.
Therefore, you can be certain that earthquake insurance in Utah is a necessary thing to enroll for. There are many insurance companies ready to cover you during this crisis. But is earthquake insurance worth it in Utah? Time to find out!
Policies Of Earthquake Insurance
A policy is considered the limit of your particular earthquake insurance. Therefore, before enrolling with an earthquake insurance company, make sure to know all the policies so that you can be certain about the coverage area.
The range of policies changes annually depending on the economic condition of Utah. So, if you already have insurance enrolled somewhere, make sure to double-check them to see the current needs of the policies.
An earthquake insurance policy typically stands on four primary factors. They are as follows:
- Dwelling.
- Other structures.
- Loss of use.
- Personal property.
The last three factors depend on the first major factor- which is your dwelling. By this point, it is clear to you that earthquake insurance is provided on your dwellings and the other coverages are dependent on the percentage insurance money of your dwelling.
For example, let’s say you have enrolled for earthquake insurance with 10000 dollars on your dwelling. The different company provides a different percentage for the rest of the coverages. According to Utah Insurance Department, the percentage distribution is given by:
- Personal Property: 50% of the Dwelling.
- Loss of use: 20% of Dwelling.
- Other structures: 10% of Dwelling.
Therefore, the insurance money on the other coverages stands to:
- Personal Property: 5000 dollars.
- Loss of use: 2000 dollars.
- Other structures: 1000 dollars.
As you can see, there are many areas in that you will receive coverage once you have enrolled in earthquake insurance. So, is earthquake insurance worth it in Utah? You might say yes, but grab the paddles; there are still some additional key factors to consider before making such decisions.
Earthquake- Other Factors to Consider
Though insurance companies will provide you with the necessary insurance money to cover all the damages from an earthquake, there are other factors before you can utilize that amount. Some of them include the following:
- Deductible Fees.
- Waiting Period.
Deductible Fees
The deductible is the amount you need to pay from your expenditure before your insurance takes over. For example, you have insured your dwelling to an amount of 10000 dollars, and your deductible fee, according to the policy, is 2000 dollars.
Therefore, you need to spend 2000 dollars first for your damage, and if the damage cost exceeds the deductibles, then the insurance providers will provide you with their backup.
Deductible percentages are different based on different companies. According to Utah Insurance Department, the base deductibles are 5 percent, 10 percent, and 20 percent depending on the agreed-upon policies. So, in a way, this is a drawback to you, considering the magnitude of your losses.
Furthermore, this deductible falls not only on your dwelling but also on other categories such as personal property, loss of use, and other structures. In another way, if your Utah earthquake damage is insignificant, say only 2000 dollars.
Then we are very sorry to say your deductible fees will cover that. In such cases, the insurance providers will not supply you with their money.
Waiting Period
Another essential factor to consider while enrolling for earthquake insurance is that the insurance providers require a significant waiting period before providing their coverage.
The waiting period for earthquake insurance holders in Utah generally takes 10 to 30 days. After there has been seismic activity in a particular region and damage has been cost, the investigation team will rush down to the area to perform thorough research on the damage. Then they will analyze the repair cost; if the price does not surpass the deductible, you are on your own.
And, if the damage is significant and you will require insurance money, the investigation team will send a report to their headquarters to run down your policies and papers to carry out the verification process.
Once the verification is complete, they will sign your document for significant insurance money. This whole process usually takes about a month. Therefore, it is better to plan ahead and have some backup on your own if any such natural disaster ever occurs.
Earthquake Insurance- Does Home Insurance Cover It?
As we have already mentioned, home insurance providers do not cover earthquakes or any other natural disaster in that case. They might cover house damage and yard damage in accidental cases. But fear not; they can indeed link you with earthquake insurance companies.
Many records indicate that home insurance companies also provide earthquake insurance, but the deductible rate is very high and comes with a considerable waiting period.
According to the report submitted by Utah Insurance Department, the list below is the names of the most famous and reliable companies that provide earthquake insurance with reasonable deductibles and waiting periods.
- State Farm Fire and Casualty Company.
- Farmers Insurance Exchange.
- United Service Automobile Association.
- Zurich American Insurance Company.
Utah Earthquake Insurance- Average Cost
Though insurance companies will provide you with their money after a major earthquake disaster, you must pay for their policies yearly or monthly to run that insurance program.
The price of insurance policies runs differently depending on the brand value of the companies. Here in Utah, the average cost of earthquake insurance falls to 500 to 1000 dollars per year. You can either pay this amount yearly or have a monthly payment option as well, which is about 42 dollars.
The price of your insurance policy will also depend upon the land quality and the type of home you have available. For example, a building with bricks will be more brutal to recover and hence will cost more.
On the other hand, if your land has too much soil underneath, a major quake might have the probability of a landslide which insurance people will not cover. Therefore, this will require additional expense, which is included in the deductible costs.
How to calculate your deductible costs? Well, this value is the stated percentage of the agreed policy of your dwellings. For example, if your policy is 10000 on your residences, a 10 percent deductible will outcome 1000 dollars.
Additionally, do not forget to renew your earthquake insurance license in time. All companies provide you with a significant time to renew your license. They might cancel your insurance policies if you fail to do it within the given time. Do not worry; they will send you written authorization before they perform such things.
Frequently Asked Questions
Do we need earthquake insurance for the people of Utah?
Utah is situated on the Wasatch Fault Line, which runs the danger of frequent earthquakes. Though many citizens all over Utah do not have earthquake insurance, the Utah Insurance Department suggests that they should have one insurance enrolled.
The consequences of earthquake insurance are not friendly. Some say the deductible is high, and some say the waiting period is too long. In simpler terms, the answer is diplomatic, and we suggest doing your own research and making your own decision.
Does FEMA cover earthquake disasters?
Yes! FEMA, Federal Emergency Management Agency, stands up to those who have suffered any kind of natural disasters like floods, tsunamis, earthquakes, and many more.
Unfortunately, FEMA does not provide earthquake insurance; instead, they provide a long-term loan of 200000 dollars. But this amount might not be enough to repair your dwellings or other losses.
Can tenants get earthquake insurance for their apartments?
Typically, earthquake insurance does not fall in the category of a tenant claiming the insurance. But you can find certain agencies where you can claim a different policy to cover up for your rental apartment during an earthquake disaster.
What damages are not covered by earthquake insurance?
Earthquake insurance only covers the cost of a building after it has been damaged by earthquakes only. For example, if your premise floods away due to a Tsunami after the earthquake, the insurance company will not cover such expenses. Therefore, if you live beside a river that frequently floods during an earthquake, think twice before enrolling for earthquake insurance.
What are the amounts of deductible fees in earthquake insurance?
Earthquake insurance providers in Utah provide deductible fee percentages in three categories- 5%, 10%, and 20%. No matter what your damage is, the providers will calculate your deductible on your agreed insurance money for your dwellings. If the damage is covered by deductible, they will not provide you with additional insurance money.
Why do insurance companies demand higher deductibles for an earthquake?
The reason behind higher deductible fees for an earthquake disaster is that the damage caused by a severe earthquake is beyond imagination. Covering all the costs will be merely impossible for an insurance company. Therefore, to cover the cost, they must demand higher deductible fees so the owners can contribute to repairing the damages.
What is the annual loss due to major earthquakes?
According to a recent FEMA report, significant earthquakes significantly damage high-rise buildings nationwide. The total loss estimation is given by 6.1 billion dollars annually. Some families could cover these losses with their personal expenditure and insurance coverage, but the proportion is not up to the mark.
Does earthquake insurance provide backup for a landslide disaster?
No! As said earlier, earthquake insurance only covers the damage related to earthquakes. The insurance companies would not provide for such accidents if your premise were destroyed due to landslides after a major quake.
Conclusion
As you can see, many companies are waiting for you to provide your suitable earthquake insurance. Earthquake insurances are necessary for covering your damaged building expenses, renovation, and many more.
Because the earthquake damage is so high, the insurance providers offer higher deductible costs which may be advantageous for them, but it is certainly a slap in the face for the victims.
On the other hand, even after managing a suitable amount of insurance money, the companies will take 10 to 30 days to send you that amount. By this time, your survival skills without a home or land will come into question.
Therefore, is earthquake insurance worth it in Utah? We will say it’s better to have something than nothing. The rest will depend upon your choice. We hope this article was helpful to you. Stay safe, Utahns!
Mehedi Hasan is an insurance expert with over 6 years of experience in the industry. He has a deep understanding of various types of insurance policies and is skilled at helping clients find the coverage that best fits their needs. In his current role, Mehedi works as a consultant, advising businesses and individuals on the best insurance options for their specific situations.
He is also a frequent speaker at industry events, sharing his knowledge and expertise with colleagues and professionals in the field. Mehedi holds a degree in insurance and risk management and is committed to staying up-to-date on the latest industry trends and developments. In his free time, he enjoys reading, traveling, and spending time with his family.