NEW YORK (MainStreet) Los Angeles residents received a shocking wake-up-call at at 6:25 a.m. local time today when an earthquake with magnitude 4.7 struck about 15 miles west-northwest of the downtown civic center with a depth of five miles. Considered "moderate" by the U.S. Geological Survey, the earthquake caused no damage that was immediately reported.
There are no immediate reports of damage or injury in the area, but it's a reminder that earthquake preparedness is crucial.
According to the Insurance Information Institute, about 5,000 quakes can be felt each year and since 1900, earthquakes have occurred in 39 states and have caused damage in all 50. In addition to California, the primary earthquake areas are Washington, Oregon, Hawaii, and Alaska. There are also major fault lines in the St. Louis area, the Salt Lake City area, and the Charleston area.
But no matter where someone lives, earthquakes are not covered by standard homeowner's insurance policies. Kip Diggs, a spokesperson for State Farm Insurance says that in order to be covered, homeowners must take out an endorsement on their existing homeowner's insurance policy. You don't have to live in prime earthquake country to get one. State Farm offers endorsements in 49 states. (In California, coverage must be procured from the California Earthquake Authority.) Allstate (ALL) is another company that offers catastrophe coverage, which can include earthquakes
Purchasing earthquake insurance is important for everyone because it covers both possessions and property. According to the Insurance Information Institute, earthquake insurance carries a deductible, which generally ranges between 2% and 20% of the replacement value of a house. However, states with higher than average risk of earthquakes often set minimum deductibles at around 10%. Diggs says that the cost of annual coverage ranges from an average low of $28 in North Dakota, to a high of $562 in Alaska.
The Insurance Information Institute also reports that older buildings generally cost more to insure than new ones. Wood frame structures generally benefit from lower rates than brick buildings because they tend to withstand quake stresses better. For example, a frame house in the Pacific Northwest might cost between one to three dollars per $1,000 worth of coverage, while it may cost less than fifty cents per $1,000 on the East coast. At the same time a brick home would cost approximately $3 to $15 dollars per $1,000 in the Pacific Northwest, while it would cost between 60 to 90 cents in New York. So, while the chance of an earthquake striking in these areas away from prime earthquake territory are low, so are the commensurate insurance rates.