A Primer on Earthquake Insurance

Question: What is earthquake insurance?

Answer: Earthquake insurance is an amendment added to homeowner policies, which normally exclude earthquakes as a covered risk. The amendment, or “rider,” costs $150 to $400 a year for $100,000 of coverage, and it typically is available in amounts ranging from $100,000 to $500,000.

However, the benefit is paid only after earthquake damages exceed 10% to 15% of the insured amount, not the damage total. In other words, a 10% deductible means that damages must exceed $10,000 under a $100,000 policy before benefits are paid.

Q: Is my homeowner policy worthless in a quake without the extra coverage?

A: That depends on the insurer and the policy. While an earthquake is typically excluded as a covered peril, a fire started because of earthquake damage--rupture of a gas main, for example--would be covered. In the Oct. 17 quake, some companies’ claims adjusters, who determine the insured loss, authorized payment for such things as broken windows and ruined carpeting under the homeowner policy even though there was no additional earthquake coverage.

Q: What other insurance may apply?

A: Earthquake victims hurt on the job may be eligible under workers’ compensation insurance. Crushed or damaged cars are covered by the “comprehensive” portion of auto insurance. Lost business income is covered by business-interruption insurance.

Q: Is earthquake insurance available to renters?

A: Generally, the earthquake amendment can be added to renters insurance on furnishings, clothes and other personal property.

Western Insurance Information Service in Tustin offers the following criteria to help property owners and renters evaluate their risk in deciding on earthquake insurance:

* How close are you to an active fault?

* Is your home built on solid bedrock, a steep hill where it might slip off the foundation or on fill such as in San Francisco’s Marina district?

* What type of construction? Wood-frame is least costly ($2 to $4 per $1,000, depending on company and location), brick veneer and masonry buildings are more costly to insure.

* How tall is the building?

* Is the building firmly anchored to its foundation or footings?

* Check prices and terms with several companies.

The information service offers the following toll-free number for consumers with questions about insurance: 800-397-1679.