The price of earthquake insurance has increased over the past few years as improved earthquake prediction tools have shown an increased likelihood for earthquakes in western Washington, according to Washington’s Office of the Insurance Commissioner.
There is “rising concern” that the Cascadia Subduction Zone, which runs through western Washington, will experience a “mega earthquake” in the near future, according to the National Association of Insurance Commissioners.
Whatcom Unified Emergency Management and the city of Bellingham highlighted the importance of earthquake preparation in the Cascadia region last week, marking the 317th anniversary of the last Cascadia Subduction Zone earthquake.
It’s been well enough publicized certainly in Washington state that, you know, with regard to the subject of earthquakes, it’s not a matter of ‘if’ it happens, it’s ‘when’ it happens.
Von Smith, owner of Bellingham insurance company Von Smith Insurance
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Darin DeYoung sells earthquake insurance as a partner with Oltman Insurance Agency, a Bellingham-based insurance broker. He said the earthquake policies he recommends for a typical Bellingham home can cost anywhere from $250 to $500 annually, and they often have a 10 to 20 percent deductible.
DeYoung thinks the chances we will have the next “big one” in the near future are pretty high – and he is worried its effects will be earth-shattering.
Even though he thinks the risk of a major earthquake in Whatcom County is high, he hasn’t seen those odds reflected in the number of people who have purchased earthquake insurance.
It hasn’t been long since Washington felt the pain of earthquake damage. In 2001, a magnitude 6.8 earthquake struck the Seattle-Tacoma area, causing $2 billion in damage and nearly 400 injuries. Years earlier, in 1993, a magnitude 5.6 earthquake cost Washington residents along the Oregon border about $28 million.
“It’s been well enough publicized certainly in Washington state that, you know, with regard to the subject of earthquakes, it’s not a matter of ‘if’ it happens, it’s ‘when’ it happens,” said Von Smith, the owner of Bellingham insurance company Von Smith Insurance.
Your traditional homeowner’s policy will exclude earthquake insurance, so there is no coverage for that.
Darin DeYoung, Oltman Insurance Agency partner
Despite the likelihood that an earthquake will strike again in western Washington, both DeYoung and Smith estimate that fewer than 10 percent of Bellingham residents have taken out earthquake insurance policies on their homes.
Data from the National Association of Insurance Commissioners indicates there are two main reasons people aren’t buying: it’s costly, and some policies offer limited coverage. There also is a common misconception that homeowner’s insurance will cover damage caused by earthquakes.
Enough to rebuild
“Your traditional homeowner’s policy will exclude earthquake insurance, so there is no coverage for that,” DeYoung said. “Should there be a catastrophic event and your house is damaged, you still owe your mortgage. Your biggest investment is sitting on the ground.”
“I would recommend a comprehensive earthquake policy that, at bare minimum, covers the dwelling and your contents, so that you have enough to rebuild the dwelling,” DeYoung said.
“A lot of people aren’t aware of what’s involved when you buy earthquake insurance,” said Steve Valandra, a spokesman for the state Insurance Commissioner. “Varying deductibles can apply, and you have to determine if those deductibles are worth the price of the overall premium.”
“They can go as high as 20 percent, and you’re responsible for that if an earthquake happens,” Valandra said.
The cost depends on a few factors, such as the age and foundation of your home. Smith said insuring a home with a masonry foundation, for example, typically will cost double that of a frame construction. Some older buildings might not be eligible for earthquake insurance at all.
Insurance companies also require cooperation with certain regulations, such as strapping the water heater to the walls of your home, and bolting your home’s steel plate to the foundation.
Smith said he hopes he can work with more Bellingham residents to find them an affordable earthquake insurance package. In fact, it feels to him like more people already have started reaching out to get covered.
“It seems like I’ve been getting one or two calls a week for just earthquake insurance, just my little agency, me and two little daughters,” Smith said.
“It’s something people really need to evaluate and take some time on,” Valandra said. “It’s an individual responsibility, and there’s no doubt that western Washington is at great risk.”