Think You Don’t Need Home Insurance? Think Again.
Posted by Martha Sakur in Uncategorized, tags: Homeowners, housing, mortgages, other, UncategorizedFew things are as scary as an earthquake. The very ground beneath you is moving and there is no way off getting away from it. Everyone in the country knows that one day California will be hit by “a big one,” it’s just a matter of time. Recent major earthquakes in Japan, China, Indonesia , Haiti and Chile have highlight this fact even further. While California is fairly well prepared for such an event few people actually have earthquake insurance on their homes. Recent studies show that less than 12% of home owners in California have it and less than 10% of businesses do. The rates for the rest of the country are even lower.
Most people in the United States think they are safe from earthquakes but as a rare, recent, medium level earthquake in Virginia showed, that is far from the case. The city of Memphis sits over a major fault line that in the 1800’s suffered such a massive quake that the Mississippi River flowed backwards. Seismic activity occurs daily in the Yellowstone National Park area as well. An earthquake off the coast of Mexico two years ago was felt as far away as Arizona. You might think that a minor quake doesn’t warrant insurance, but if it causes just a few cracks in the foundation it can costs you thousands. Maybe Arizona doesn’t have a major fault, but what if Mexico gets hit by a big quake that causes damages in Arizona? Are people there covered by insurance?
One homeowner found this out the hard way. Rick Waugh of Louisa, VA., suffered cracks in his homes foundation in the Virginia quake. The damages cost up to $40,000 and he had no insurance to cover it. Adding to the situation is that many homes on the East coast and the South are older much older houses and not built up to modern standards, so they are more likely to take damage in the event of even a milder earthquake.
“We didn’t even know there was an earthquake policy available for Virginia,” Rick said. Most people don’t, because they believe the larger part of the United States is immune to earthquakes. However they are wrong. In fact, 90% of the country lies in potential quake areas. Despite all this, don’t be afraid to check to what your mortgage rate would be.
The last major quake in Southern California was a 7.9 magnitude that hit near Bakersfield in 1857. Simulations show that if such a quake happened today then it could cause $150 billion in damages with only around $20 billion of that covered by insurance.
One big issue is that people believe if a “big one” hits, insurance companies will be unable to cover all the damages. That may or may not be true, but as Rick Waugh found out, it doesn’t pay to take a risk. Besides, isn’t some insurance better then none?
When you really realize how much of America is vulnerable it makes those policies look a lot nicer. It might seem expensive at first, but compared to loosing your entire home, suddenly it isn’t so bad.
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