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There was a time when Earthquake
coverage could be endorsed onto a property insurance policy. But, that's mostly history
now.
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Since the Loma Prieta & Northridge earthquakes, earthquake insurance has become more
expensive and difficult to get.
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Prior to those events, insurance
companies reaped billions in earthquake insurance premium profit over the course of twenty
years. Those profits, generally-speaking, were re-invested and used to subsidize
losses in other types of coverage. The Loma Prieta and Northridge quakes wiped out those
profits.
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The Loma Prieta and Northridge quakes sent several insurance companies into failure;
others sharply curtailed writing new insurance; policies that included earthquake coverage
were cancelled. The Whittier Narrows quake didn't help either.
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An insurance crisis developed. Many participants worked to solve it. The way things work,
there were more than two sides to this story! Let's talk about what's available
today.
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Commercial
Earthquake coverage is available as a separate insurance policy
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Deductibles vary from 10% to 25% of the
building's insurance value. |
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As an example:
Your building is worth $200,000.
Your deductible is 25% of the building value, or $50,000.
You have $75,000 earthquake damage.
You collect $25,000 from the insurer.
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Premiums are based on:
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The amount of coverage you need and |
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The age of the building and |
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The type of foundation and |
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The type of construction and |
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The number of stories and |
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The seismic condition of the
building's pad & vicinity and |
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Earthquake retro-fitting helps too. |
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Some insurers may
quote earthquake coverage only after a site has been inspected; often, inspections are
required prior to the start of coverage. |
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Inspections
generally are at your cost. |
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Earthquake Deductible Buy Back Insurance covers the deductible amount of your Earthquake
Insurance Policy*.
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If
you need earthquake coverage, you face the problem of putting enough money to cover your earthquake policy's deductible. The reserve funds are not tax deductible. They tie up your capital.
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On the other hand, the premium cost for Earthquake Deductible Buy Back Insurance is tax deductible in most cases.
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Your benefit is near total expense coverage in case of earthquake*.
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Your capital is free for
productive purposes.
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Coverage limits up to $1,000,000. Your
minimum deductible is 1% of property value, or $5,000, whichever is greater. Minimum
premium is $1,000. |
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