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Quake Risk More Widespread Than Many People Think

Everyone knows that homeowners in California face a significant earthquake risk, but few realize that earthquakes have been recorded in 39 states during the last 100 years. Moreover, damage from earthquakes has been inflicted in all 50 states, according to the Insurance Information Institute.

The institute says homeowners and business owners need to be better prepared for potential earthquake damage.

Each year, about 5,000 earthquakes occur in the United States alone, though most are small or happen in areas not widely populated. Many cannot even be detected except by seismic readings.

But with the population growing in seismically active areas and with many older buildings being vulnerable to damage, the institute believes that many people do not know that standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available, however, either in the form of an endorsement or through a separate policy for homeowners.

Unlike flood insurance, earthquake coverage is available from private insurance companies rather than from the government. The state of California also has an earthquake authority that is privately funded but publicly managed. The agency aims to make earthquake coverage more widely available and affordable in the Golden State.

Most earthquake policies have deductibles that typically range from 2% to 20% of the replacement value of the structure, depending upon proximity to a fault line.

The standard California Earthquake Authority policy includes a deductible of 15% of the home's replacement cost.

Still, a poll conducted by the Insurance Information Network of California found that only 12% of California homeowners carry earthquake insurance.

Many insurers require a property inspection before issuing earthquake insurance. Some require that a home be bolted to its foundation, for instance.

Other factors that may be assessed include the location and bracing of exterior walls, strapping guards to secure fixtures such as water heaters, and the manner in which shelves are mounted on walls.

"Unlike other disasters such as hurricanes, there are no seasons or warnings for earthquakes," noted Loretta Worters, vice president of the Insurance Information Institute.

In recent years, even New York City has registered several measureable earthquakes. Fortunately, those quakes have been too small to cause significant damage, but analysts warn that the possibility for a major earthquake exists in the region. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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