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Why You Need To Consider Earthquake Insurance

On July 4, 2019, the Mojave Desert town of Ridgecrest, CA, was jolted by a 6.4 magnitude earthquake. The next evening the same Southern California area was rocked by a 7.1 magnitude earthquake. These two events were covered intently by every news media outlet, while viewers from around the nation learned that the areas affected were remote with small populations. It was soon determined that the quakes were felt in Baja California, Reno, Las Vegas, Phoenix and the greater Los Angeles area. As the dust settled, many wondered how the victims would recover financially and emotionally. The California Earthquake Authority (CEA) estimates that only 20% of the Ridgecrest homeowners had earthquake insurance. Let this be a wake-up call to recognize why you need to consider earthquake insurance.

Earthquakes by the numbers…in the United States

Depending on your age or where you live in the United States, you might not recall many of the top ten historical earthquakes based on estimated insured losses. Fortunately the Insurance Information Institute (III) offers an informative overview of facts and statistics which includes data on the United States. John Bailey Company’s current clients and future clients may find it interesting that of the top ten, eight occurred in California or a portion of California. But it is important to remember, the top ten included #2 in New Madrid, MO (future location of Memphis, TN), 1811-1812 and #5 in Charleston, SC, 1886. Calculated in 2017 insured loss dollars, the 1906 San Francisco earthquake still ranks #1 in the amount of $71 billion. It was the morning of April 18th with an estimated moment magnitude of 7.9. Historians believe that up to 3,000 people died and over 80% of the city of San Francisco was destroyed.

Do you live in Tennessee? Maybe you should consider earthquake insurance…

Shortly after the most recent high magnitude California earthquakes, The Tennessean published “How likely is Tennessee to have a catastrophic earthquake? ‘If it happened once, it will happen again.’” It is a cautionary overview and refers to the New Madrid, MO, earthquake of 1811-1812.

The Emergency and Disaster Management Digest (EDM) on July 23, 2019, published their own observations, “Earthquakes: The ‘Big One’ Might Hit the Midwest – Not California.”

“The early 19th-century seismic activity occurred in an area of approximately 100,000 square miles – from Cairo, Ill., to Memphis, Tenn., and from northeastern Arkansas to Chickasaw Bluffs, Tenn. That part of the United States had few residents at that time, but today there are approximately 45 million people in the region.”

Understanding earthquake insurance…

In October 2017, we published a blog post titled Homeowners Insurance Endorsements. We outlined types of policies, coverages, and various endorsements to examine – including earthquake insurance. According to Trusted Choice, earthquake insurance in Tennessee is considered more affordable when compared to other states like Alaska or California. However, the cost of the premium for property located in Tennessee will be determined by some or all of these factors:
1. Your proximity to the New Madrid Fault line
2. Your home’s value
3. The amount of contents coverage purchased
4. The building materials used to construct your home (or business)

Importantly, you should always inquire as to the deductible for an earthquake insurance claim. Normally for a natural disaster claim you pay a percentage of your coverage which could be from 5% to 10% for an earthquake. For example, if your coverage is $500,000, you could be out of pocket $25,000 or $50,000.

Let us help you insure a great life

The John Bailey Company was founded in Knoxville, TN, in 1946. We promise our clients:
Integrity – Loyalty, honesty, commitment and sound ethics
Service – Accurate and timely response to customer needs
Expertise – Diversity is our niche. We understand different business and person exposures which allows us to create specialty insurance solutions

If you or another family member has questions about purchasing earthquake insurance, feel free to contact us to discuss solutions to insure a great life.

Question or Comment?

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