What to know about earthquake insurance in Oklahoma

If you’ve heard about recent earthquakes near Prague, Oklahoma, you may be wondering about the option of earthquake insurance.

You should know that homeowner’s insurance policies do not cover damage from earthquakes without a rider, or a separate earthquake policy. Coverage is expensive and deductibles are high.

Here are some basics of earthquake insurance from the Oklahoma Insurance Department.

How much earthquake insurance should I buy and how much does it cost?

• “The right coverage value will depend on how much of the repair and replacement costs can be paid out-of-pocket should the consumer suffer a total loss.”
• “Earthquake policies vary in cost depending on multiple factors, including the desired level of coverage and deductible amount. They are also determined by the property’s location, age and construction.”
• “Insuring a home for just its appraisal or loan value will likely mean that in the event of an earthquake, there will only be enough coverage to repay the mortgage lender and not enough to repair the home.”
• Be aware of insurance policy limits of coverage. “Often within these limits are sub-limits on specific items, such as a $50,000 limit on personal property replacement with a $5,000 sub-limit on computers and peripherals.”

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What is the deductible and how is it calculated?

• “Earthquake insurance carries a separate and substantial deductible. The deductibles work differently than those of standard homeowners policies, including separate deductibles for the home, outside structures such as a detached garage or a fence, and for personal contents.”
• “The deductible is calculated as a percentage of the insured property’s value – commonly 5% to 10%. For instance, a $100,000 home would require a deductible of $5,000 to $10,000.”

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What does earthquake insurance cover?

• “An earthquake insurance policy covers home repairs needed due to earthquake damage and personal property directly damaged by an earthquake.”
• ‘It might cover increased costs of repair to meet current building codes and costs to stabilize the land beneath structures.”
• “It pays extra living expenses while the home is under repair and covers the cost of debris removal.”

FROM FEMA:How to “Drop, Cover, and Hold On” during an earthquake.

What does earthquake insurance not cover?

• “An earthquake policy typically does not cover damage to lot or land, such as sinkholes.”
• “Earthquake insurance also does not protect vehicles and won’t cover the cost of external water damage.”
• “Some insurance companies do not cover the replacement of masonry veneer − brick, rock or stone that covers the outside of the home.”

Why should homeowners or renters buy earthquake insurance?

• “Earthquakes are not covered under a typical homeowner’s or renter’s policy and can cause significant damage to property.”‘
• “It’s important for consumers to consider how they would manage the costs of recovering from an earthquake should they be impacted. For example, can they afford to repair or rebuild and how likely is the home or business to be seriously damaged?”
• “Brick homes, wood-frame homes with crawl spaces and multistory homes are the most likely to suffer serious damage from an earthquake.”
• Note: “Most companies won’t sell new earthquake insurance policies for 30-60 days after a quake due to the expectation of aftershocks.”

How can I buy earthquake coverage?

• An earthquake endorsement can be added to home insurance policies, although not every insurance company offers earthquake coverage.”
• “Earthquake insurance is also available as a stand-alone policy independent of homeowner’s insurance.”

For more information, go to the Oklahoma Department of Insurance’s earthquake page, at www.oid.ok.gov/consumers/insurance-basics/disasters/earthquakes/. Or call the agency’s Consumer Hotline toll-free at (800) 522-0071.

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Senior Business Writer Richard Mize has covered housing, construction, commercial real estate and related topics for the newspaper and Oklahoman.com since 1999. Contact him at rmize@oklahoman.com. Sign up for his weekly newsletter, Real Estate with Richard Mize. You can support Richard’s work, and that of his colleagues, by purchasing a digital subscription to The Oklahoman. Right now, you can get 6 months of subscriber-only access for $1.