Should you buy earthquake insurance?

After a 5.4 magnitude earthquake shook southern Illinois this morning, I wondered what would happen if my home were caught in a strong tremor. Like most people, my home insurance doesn't cover such an eventuality. Ohio is in blue on the U.S. Geological Survey Earthquake Hazards Program map of earthquake risk, so I probably won't go shopping for coverage.

Earthquake insurance is available, though. Usually sold with a large deductible, the coverage might be a good investment for those in highly vulnerable areas. Of course, the higher the risk, the higher the premium. Californians are assured that coverage is available thanks to the creation of the California Earthquake Authority The CERA points out that there is no part of the state that is immune from earthquakes.

"For many California homeowners, their home is their biggest financial asset," The CERA says on its Web site. "Without earthquake insurance, how do you plan to protect that asset from the costs of earthquake damage?"

But earthquakes aren't just a California problem. The Insurance Information Institute (III) points out that since 1900 these geological events have occurred in 39 states and been felt in all 50.

"Earthquake insurance carries 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 structure," The III says on its Web site. "Insurers in states like Washington, Nevada and Utah, with higher than average risk of earthquakes, often set minimum deductibles at around 10 percent." Usually, you can request a higher deductible to save money on earthquake premiums.

The purple area in the middle of the country on the map above represents the New Madrid fault, which gave way dramatically in 1811-12, and could be responsible for today's tremors.
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