Pros & Cons of Earthquake Insurance

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With all this recent seismic activity, local insurance companies are getting a lot of business. Hundreds of local homeowners have been rushing out to purchase earthquake insurance in the past few days, hoping to gain a little protection in case a big one hits.

Hundreds of local residents, all the way from Montreaux to Cold Springs have invested in earthquake insurance, hoping for a little piece of mind.

Roxane Summerfield bought earthquake insurance, but reluctantly. She purchased her northwest Reno home only months ago, and says she never thought she'd feel it shake.

"I don't think of earthquakes and Reno together. I just don't," she said.

Since recent seismic activity in Summerfield's neighborhood increased, she decided maybe earthquake insurance wasn't such a bad idea. She decided to call her State Farm agent, Tim Rosene, just in case.

"He said, 'you're covered as of right now' and I said 'thank you.' As soon as we got off the phone, there was another earthquake. I called him and right back and said 'did you feel that?!'"

Rosene says Summerfield is one of hundreds of local residents who have added earthquake coverage to their home owner's policy.

"Generally, it covers the house, its contents, and also an additional living expense in case an earthquake happens and they have to live somewhere else while repairs are getting done," explained Rosene.

Earthquake insurance usually runs between $400 and $500 a year. That's an average for a home that costs around $300,000. The price varies, depending on what your home is worth, and what it's made of...such as frame or stucco or masonry. It also depends on what kind of foundation it's built on. To decide whether it's worth it, Rosene says you should weigh the cost of insurance, with the risk of a large earthquake.

"There have been 20 small earthquakes just yesterday. If you have earthquake coverage, you're probably going to sleep a little better."

"I had an icky feeling in my stomach because you know, pride of home ownership and everything. I don't want anything to happen," added Summerfield.

While the hope is, of course, that no big earthquakes will happen here, Rosene says earthquake insurance is actually designed for a powerful earthquake. When one hits, you pay the deductible and the insurance company helps with the rest.

Seismologists say something to keep in mind is that when there is a big earthquake, like the one in Wells, residents very seldom get much help from federal aid.

The price of a deductible depends on the company, but 10% is about the if your house is worth $300,000, your deductible would be $30,000. Obviously for some people, that's pretty costly, but it's up to each family to decide if it's worth it or not.

A University of Nevada, Reno, professor wrote a very interesting article regarding the purchasing of earthquake insurance. It may help provide a little insight about what you should do.

You can find it at: