Earthquake insurance covers what?

**Scott Patterson** · 10-31-2007, 07:10 AM

At an inspection yesterday, I overheard a fairly experienced and what I have perceived a very honest Realtor telling his client that he discovered that Earthquake insurance covers a home that has been damaged by the ground shrinking around it during a drought.

He went on to say that it happened to his own home this past summer. His home settled by 3" on one side when the ground shrunk under and around the foundation. He then went on to say that the insurance paid to repair the foundation.

Has anyone ever heard about this? I would think that Earthquake insurance would only cover a seismic event and not soil shrinkage from a drought.

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**Jerry Peck** · 10-31-2007, 07:32 AM

Originally Posted by Scott Patterson

Has anyone ever heard about this? I would think that Earthquake insurance would only cover a seismic event and not soil shrinkage from a drought.

Scott,

I have not heard of that, and I first thought the same thing as you when I read your post, then (me thinking is always dangerous) ...

.... I thought about what earthquake in$urance would cover:

Earth movement.

If the earthquake in$urance covered 'movement of the earth' without specifying that is was a seismic event (in which case they would be obligated to define a seismic event) then, expansive soil and sink holes are both 'movement of the earth' events as well as problems related to nearby blasting operations.

I looked up some definitions on Merriam-Webster Online , the Merriam-Webster on-line dictionary and followed 'earthquake' thorough it links, which includes 'upheaval' through to 'upheaving' which took me to 'lift', and 'movement of the earth' could then include expansive soils, and, possibly, sink holes (when the hole opens, sometimes the earth around it 'lifts').

**Rick Hurst** · 10-31-2007, 01:49 PM

We have coverage on our Homeowners insurance that will pay out as much as 15K for soil movement that leads to foundation repairs. Yeah, I'm probably paying extra for it. Its not called Earthquake Insurance though.

rick

**Rick Bunzel** · 11-07-2007, 07:58 PM

I was living in the Bay Area during the Loma Prieta earthquake. We had plenty of rocking and rolling which caused my neighbor's fire place to crash into my house. After the fact my neighbor said she had earthquake insurance that it would cover repairs. Two weeks later I asked when the adjuster would be out to start the claims process. She told me that her deductible was 10% of the current value and that the insurance didn't start until there had been $40K of damage (which there wasn't) Needless to say she didn't offer to fix it and was quite scarce for the next year. We were having some other work done and patching the stucco was no big deal.

Insurance companies are in the money making business, just read there annual reports. I can't see them paying for a shrinkage claim!

//Rick

Steven Meyer · 04-08-2008, 11:52 AM

Earth quake insurance only coveres damage caused by an actual event. And ony after the earth quake occurrs. The "deductable" is very high.

Most states, earth quake insurance is not a part of a standard policy, but is available at an extra cost.

If there was recovery for the house foundation issue/problem, then it would have been covered under the standard policy.

Gosh, it's trouble enough when RE agents think of themselves as a know it all with inspections, now they are insurance experts??!!

It never ceases to amaze me that these LICENSED RE "professionals", continue to put out information to the homeowners that they have no clue about.

Makes it difficult to dispell incorrect information.

So, you are correct, earth quake only covers earth quake, period!!!

Honest Realtor, is there such a thing?????

Originally Posted by Scott Patterson

At an inspection yesterday, I overheard a fairly experienced and what I have perceived a very honest Realtor telling his client that he discovered that Earthquake insurance covers a home that has been damaged by the ground shrinking around it during a drought.

Originally Posted by Scott Patterson

He went on to say that it happened to his own home this past summer. His home settled by 3" on one side when the ground shrunk under and around the foundation. He then went on to say that the insurance paid to repair the foundation.

Has anyone ever heard about this? I would think that Earthquake insurance would only cover a seismic event and not soil shrinkage from a drought.

Steven Meyer · 04-08-2008, 12:17 PM

I went through the California Sylmar earth quake of years ago, and incurred damage, but as you say, and it is true, the deductable is a per centage of the total value of the structure. My damage never reached that threshold, therefore I was responsible for the repairs.

As to the policy covering damage to a neighboring property, I will admit, I don't know, but you have brought up a good point, will have to read my policy!!!!

The ONLY advantage of earth quake insurance, is; if and when a catastrophic earth quake comes, the policy holder will be at least able to recoup a good portion of rebuilding the house. Any one getting earth quake insurance should carefully read and understand the policy.

The only way I could see the policy covering sinking is if the earth quake caused the ground under the house to become unstable. And that would probably be evident shortly after the earth quake, not years later. Keep in mind, there are two "types" of earth quakes, rolling and shaking, each causes different types of damage to a house and its structure.

Originally Posted by Rick Bunzel

I was living in the Bay Area during the Loma Prieta earthquake. We had plenty of rocking and rolling which caused my neighbor's fire place to crash into my house. After the fact my neighbor said she had earthquake insurance that it would cover repairs. Two weeks later I asked when the adjuster would be out to start the claims process. She told me that her deductible was 10% of the current value and that the insurance didn't start until there had been $40K of damage (which there wasn't) Needless to say she didn't offer to fix it and was quite scarce for the next year. We were having some other work done and patching the stucco was no big deal.

Originally Posted by Rick Bunzel

Insurance companies are in the money making business, just read there annual reports. I can't see them paying for a shrinkage claim!

//Rick

**Jerry McCarthy** · 04-08-2008, 01:04 PM

I sit almost dead-nuts square on top of the San Andreas Fault, the largest EQ fault in the country and when I asked my insurance agent if I could get EQ insurance he first gagged and then began laughing. He is still laughing and that was a number of years ago. I’d still rather deal with seismic events than those ocean breezes they habitually get in Florida or small “blows” the occasionally occur in the heart land of our country.

**Brian Hannigan** · 05-14-2008, 08:26 AM

An InspectionNews reader who found the site while doing research for a paper she is writing on Earthquake insurance gave me this link from the Washington Insurance Commissioner.

Facts About Earthquake Insurance