Earthquake Insurance: Who Has It and Who Needs It

Today we are going to talk about the sticky subject of earthquake insurance. We touched on this a little bit in our Financial Preparedness series, including best earthquake insurance practices, but we are going to go a bit more in-depth on for this update.

One of the most commonly asked questions is, “Do I need earthquake insurance?” The answer is not simple. Just like your house isn’t like everyone else’s, what to expect from an earthquake insurance policy (or even your homeowners insurance policy) is unique to your situation. Hopefully, after reading, you’ll have a better understanding of what to consider when shopping for financial products to secure your money and your life.

Is your house at risk for earthquake damage?
Is your home an investment or a risk?

Who needs earthquake insurance?

As we discussed in our article Best Insurance Practices, it really depends on you. Earthquake insurance coverage isn’t required by your lender or by the state. Technically, all fifty states in America are at risk for earthquakes, but there are some states where earthquakes are more likely, more frequent, or more powerful. If you live in one of these states, like Washington, Oregon, or California, the decision to get earthquake insurance should be carefully considered.

You’re well aware of the risks that come with living in one of these Western states. Look anywhere–social media, the news, a quick Google search–and you’ll quickly see how frequent seismic activity is, even if you don’t always feel the quake. Some states may also experience an unexpected rise in seismic activity due to natural or manmade changes to the landscape and the environment.

Either way, you need to know how fault lines can increase your risk and how you plan to respond to that risk. If you’re familiar with your risk factor remember, just like with the Napa earthquake of 2014, some fault lines are either undiscovered, seemingly inactive, or connected to other faults that may cause a chain reaction. Earthquake science isn’t an exact science with predictions, so take this data with some caution.

One massive earthquake can be devastating. Earthquake prep usually brings to mind preparing for physical safety, but not as many people remember the financial recovery. Small earthquakes may not be much to worry about, but one moderate-to-large sized earthquake can be devastating enough to do some costly damage to your home. That’s where insurance makes a difference.

Do I need earthquake insurance?

Earthquake insurance, just like any insurance policy, functions as a way to cover the cost of something you wouldn’t usually pay for out of pocket. Generally speaking, if you own more of your house than you owe on it, or you’re counting on your equity to be a significant investment for your finances, you should give earthquake insurance a serious thought. Like a horrible episode of a home renovation television show, you’ll be possibly living in renovation and repair purgatory indefinitely without a safety net and with neighborhood comps that are also damaged or destroyed.

The tradeoff is a monthly premium in favor of saving hundreds of thousands of dollars after a giant quake strikes your area. Stay tuned–we’ll cover more on how earthquake insurance works next week!

Where can I get earthquake insurance?

Your Homeowners Insurance Carrier

Let’s be clear: your homeowners insurance policy does not cover earthquake damage. If you’re tired of hearing it, many people still are in the dark on this one. However, there are plenty of providers that can help you meet your financial goals with an earthquake insurance policy.

A great first place to search may be your current homeowners insurance provider. Ask your carrier or your insurance agent if an earthquake insurance policy can be added or if you are a good fit for a stand-alone earthquake insurance policy. If you live in California, the law requires that home insurance carriers also offer earthquake coverage. While you may feel more comfortable going with a carrier you already know, don’t stop your search here.

Does my homeowners insurance carrier offer earthquake insurance?

Some homeowners insurance carriers either don’t like to write earthquake insurance business or aren’t well-designed to handle the risk. Those carriers will price their earthquake insurance policies accordingly, and you’ll pay more to cater to their level of expertise, risk, and overall pool of other policyholders.

Likewise, their experience with catastrophic-risk claims is limited. Not only do some homeowners insurance carriers design and rate their earthquake policies to reflect their reluctance, but they may also structure their claims process like their homeowners claims process. Natural disasters like earthquakes can impact large areas all at once, so this means potentially a huge influx of claims of various amounts will hit the homeowners insurance carrier at the same time. In some cases, this can overwhelm an insurance carrier that doesn’t specialize in this type of insurance.

For these reasons, your homeowners insurance carrier may not offer the best deal for you, so be sure to look around and carefully consider all of your options before settling on this one. Choosing an earthquake insurance carrier requires a bit of research, but the benefits are considerable when you secure something that fits your lifestyle and your budget.

State Earthquake Insurance Providers

A second place to check for earthquake insurance is state-managed groups. There are states, such as California, where residents can purchase coverage through a privately funded but publicly managed provider. In California, in order to be eligible, one must be a policyholder of a participating insurer.

Private Earthquake Insurance Carriers

A third place to check for earthquake insurance is a private earthquake insurance provider. In California, Oregon, and Washington, residents can secure earthquake insurance coverage through GeoVera Insurance Company, Coastal Select Insurance Company, and several other carriers. These carriers specialize in earthquake risk and are subject to the same guidelines, financial reviews, and operational standards of homeowner insurance carriers.

How Do I Pick an Earthquake Insurance Policy?

It is essential to shop around, get quotes from various carriers, and weigh your options carefully. Not only should you look at the premium, but read to see what you’re getting with your coverage and if it will work for you in the event of an earthquake. If you’re not sure what you need or you want a second opinion, try talking to your insurance agent (or find an earthquake insurance agent here) to get expert advice. 

Now that we have covered who needs earthquake insurance and where to find it, we will take you through the anatomy of an earthquake policy. What does a policy cover?  How does a deductible work and how is my premium calculated?  What are the pros and cons of a private insurance carrier compared to a state-managed carrier? These questions and more are answered in our next update. Stay tuned!

Disaster App Takeover: Digital Preparedness for Earthquakes

Is it possible for a disaster app on your smartphone to warn you about an earthquake before it happens?

The April 5th, 2018 5.3 magnitude Los Angeles quake is proof of that possibility. Those who had signed up for the Quake Alert disaster app reported a warning thirty seconds before the shaking started. Likewise, early warning systems warned Mexico residents sixty seconds before the 8-magnitude earthquake last September. The science may not be perfect yet, but these warnings could prevent some injuries and give first-responders an edge.

Every Disaster App You Need for Before, During, and After the Quake.

There are dozens of natural disaster apps out there to help you in a bind or warn you about dangers. You’ll need at least a few basics in your pocket if you live in earthquake country. Take your preparedness to the next step with this list of apps that you’ll be glad to have:

Facebook

Disaster Apps to Reconnect
Get reconnected with loved ones after a natural disaster.

Yes, Facebook is definitely somewhere to get your fill of cat videos, the latest news (real or fake), and relatable memes, but it’s also an excellent app to have after an emergency. Facebook has a Safety Check feature so that you can let your loved ones know that you’re safe after an earthquake or another natural disaster. The app will even send a push notification to remind you about this Safety Check feature based on your GPS location. As soon as you’re safe, be sure to mark yourself safe in the app.

Nextdoor

If Facebook isn’t your thing, Nextdoor is another great social media app that can help you after a disaster. Nextdoor is an online community for your neighborhood and surroundings. Officials use Nextdoor to quickly communicate crucial information to their community. You can expect to see messages from policy, sheriff’s offices, and first responders in this app. Likewise, Twitter has been used as a communication platform for emergencies.

ReUnite

An incredibly valuable app, ReUnite does just that–it helps you to reunite with loved ones if you are separated from them during a natural disaster. You can report lost or found people with a photo and their information with a few simple steps.

First Aid by American Red Cross

First Aid Disaster Apps
These disaster apps will help when you need some quick first-aid advice in a panic.

The Red Cross has developed a few apps that are great to have on hand for emergencies. One of these apps is First Aid is an absolute necessity. It gives you simple step-by-step directions on first aid response for any medical emergency, and this is crucial guidance if you live in a disaster-prone area. If there’s one disaster app you should have, it’s this one.

Ice Standard ER 911

ICE Standard ER 911 puts all your vital health and medical information on your smartphone’s lock screen. First responders can use this information even if you’re too injured to answer these questions for yourself. Some phones have this capability built into the operating software, such as the Apple “Health” app, so make sure your health profile is completed if you decide to skip on this third-party disaster app.

Pet First Aid

Let’s not forget about our furry companions! For pet owners, a mobile app that gives step-by-step instructions on how to tackle 25 common pet problems is a huge help. This app provides directions through text, video, and images, and can even locate the nearest emergency vet hospital.

Disaster Alert

Earthquake Alert Disaster Apps
These apps will help with a warning when an earthquake is coming or send an alert when you need help.

This app by the Pacific Disaster Center gives you mobile access to monitoring of natural disasters and other hazards. It also has early warning capability for hazards around the globe.

SirenGPS Mobile

This emergency app can give first responders information on your whereabouts much faster than dialing for 911 assistance. If your community uses Siren 911, emergency crews will get updates on your location, profile details, and medical information–all at the touch of one button.

Red Panic Button

This app is a fantastic addition to your smartphone, whether or not you live in an earthquake-prone area. Essentially, this app generates a message or email containing your GPS-determined coordinates to a designated panic number of your choice. Backpackers, travel-enthusiasts, and earthquake preppers alike will all be thankful to have this function added to their tools.

My Earthquake Alerts & Feed

This free earthquake disaster app provides earthquake alerts for around the world events. These alerts include earthquakes of 1.0 and up in the United States and 4.0 and up outside of the United States.

Life360

Disaster Apps for the Earthquake Aftermath
These are helpful for the short and long-term recovery.

After an earthquake or catastrophe, you’ll likely have quite a few people needing to know where you are and when you’ve gotten to safety. Once the dust has settled and you’re on your way to safety, this disaster app will track your movements and automatically send updates to your selected contacts list to let others know when you’ve arrived at your intended evacuation destination.

Zello

This disaster app allows you to use your phone as a two-way radio or walkie-talkie. You can join channels and send instant voice messages or photos using your phone’s network or WiFi connection–even with an older 2G network connection. For more information on how this app works, Business Insider provides this tour of the Zello interface and how to use it.

GasBuddy

This may be a small detail, but it’s a pretty big deal after an emergency event. You won’t be able to evacuate if you can’t find any gas to put in your car. GasBuddy helps you to locate the closest working gas pump.

FEMA Disaster App

FEMA has developed a handy disaster app that is a valuable resource after a crisis. This mobile-friendly (and free!) guide will help you find relief centers near you with access to services, shelter, and other resources for victims of earthquakes, hurricanes, and other natural disasters.

Earthquake App by the American Red Cross

The Red Cross earthquake app is like the Swiss Army knife of earthquake applications. It includes step-by-step directions on what to do during and after an earthquake. Even better, these directions are available for offline use so you won’t need an internet connection to get this info at your fingertips. It also connects with the USGS earthquake alert feed to notify you if an earthquake strikes nearby. Finally, there is a safety alert feature built in that shares a message to social media and through email and text to let others know that you’re safe.

Disaster Apps are Essential to Modern-Day Earthquake Preparedness.

First responders are limited in their resources after an earthquake or another natural disaster. Smartphone technology makes it easier for them to connect with the community. When you consider your earthquake preparedness strategy, remember to include these apps as some helpful (and portable) tools in your emergency kit.

Digital Preparedness is the New Earthquake Readiness Kit

Earthquake and disaster planning often overlook digital preparedness. Conversely, it’s one of the most straightforward ways of preparing for emergencies of any kind. Above all, digital preparedness sets a goal that is both attainable and practical.

Last year we saw how critical technology is in the midst of a disaster. Hurricanes Irma and Harvey blasted through the southern United States in 2017, and disaster apps and social media networks became essential instruments during and after the hurricanes. Likewise, expect first responders and your family to reach for their smartphones and computers after an earthquake.

Beyond having the best apps for communicating with loved ones, what does it mean to have your tech ready for an emergency? Maybe you’ve spent hours printing out emergency contact lists, or you’ve carefully filed a safety deposit box, but that may be wasted effort if you can’t access that same information when you’ve evacuated your home.

Why You Need to Make Digital Preparedness your 2018 #Goals.

Rock, paper, scissors: the game of earthquake digital preparedness
Earthquake preparedness includes using all the resources you can.

A digital disaster kit only takes a day to put together, and it will save you weeks of stress after a disaster strikes your home.

Think of digital preparedness like a game of “rock, paper, scissors,” except you’ve added in “smartphone” as a fourth option. This game doesn’t work unless you have all options available to you, but each option is only the winning choice if the circumstances are just right. If you’ve started your emergency first-aid kit, that’s great–you’ve got “scissors” covered (the physical means to prepare). If you’ve started your financial first-aid kit or financial preparedness planning, you’ve got paper covered (the financial, legal, and administrative aspects of preparation). Mother Nature will bring the “rock,” and you’ll be sorely disappointed if your toolkit is lacking the brains of the operation: your smartphone.

When it comes to earthquakes, rock beats paper and scissors every time.

Digital Preparedness gives you the ability to access necessary files, documents, and information at any time and where ever you are. If an earthquake strikes and you don’t have the time to grab your data or you’re away from home, you’ve got digital copies on your phone ready for your use. Furthermore, loading up your smartphone with some essential disaster apps will help you reconnect with loved ones, get disaster updates, teach first-aid tips, and walk you through earthquake aftermath recovery.

Start with a Digital Disaster Kit.

If you’re like most people, your smartphone is your preferred storage device of choice. It’s portable and practically attached to your hip at least most of the day (or all of it, no judgment). If you want to go the extra mile, have two forms of digital storage. For example,

  1. A mobile device, such as smartphone or tablet and
  2. A flash drive or external hard drive

There are a few reasons to have multiple storage locations. First of all, two kinds of storage may make you feel more secure. Secondly, a backup will give you access to these documents if your mobile device is inaccessible. However, if you choose an internet-based storage method, be aware of the inherent risks and practice extreme caution with the security of your account(s).

The American Red Cross recommends using your mobile storage device as a digital disaster kit. You’ll need to put these in storage on your mobile device for a complete digital library:

  • Current or recent photos of family members and pets. This will help if you need to identify or locate a family member after the earthquake.
  • Copies of personal identification records, such as driver’s licenses or passports.
  • Critical personal and financial records. This may include a list of credit cards and lending institutions plus the contact information for them.
  • Medical cards and medical information for each family member. Include any allergy or immunization records.
  • Veterinarian records (if applicable). Include your pet’s vaccination records and the contact information for their veterinarian, reliable shelters, and pet-friendly hotels or accommodations.
  • Copies of vital records, including:
    • Social Security Cards
    • Birth and marriage certificates
    • Wills, living wills, medical directives, trusts, and power of attorney paperwork
    • Property and personal insurance policies, paperwork, and documents.
    • Deeds to property or properties
    • Lists of household contents and personal property

Community Preparedness and Why it Matters

Beyond preparing your home and your finances for the next disaster, there are ways you can become involved in your community’s preparedness plan. Why? The reasons are simple:

  • You are the only help available right after an earthquake.
  • Lack of preparation could make you and your family a burden upon valuable resources.

How long will it take for help to arrive? Estimating the response time is hard. Due to the possibility of significant infrastructure damage coupled with an enormous number of people needing help, it isn’t likely that emergency response teams will arrive quickly. Response strategies have changed, improved even, in the last 24 years since the 6.9 magnitude Loma Prieta earthquake. However, officials strongly encourage a community effort to support the emergency response teams.

If you’re interested in getting more involved in your community’s preparedness plan, and, furthermore, helping out during a crisis, here are some ways you can become more proactive.

Community Preparedness Matters
After an earthquake, you are your neighbor’s first responder.

Supporting Community Emergency Teams

Citizens on Patrol

Citizens on Patrol (COP) is a program that allows citizens over the age of 21 to become volunteer policeman during a crisis. Your duties would include assistance with traffic control, emergency stations, patrolling neighborhoods, and some administrative work.

Citizen Fire Academy

Similar to the COP, Citizen Fire Academy is a program that allows citizens to get some of the training that the fire department members receive. This training provides community members the opportunity to gain experience in fire and life safety procedures. Depending on your community program, you may even have the chance to ride along with on-duty emergency responders during emergency calls.

In addition to essential fire and safety training, Fire Core program volunteers help with prevention and education measures. This includes installation of smoke detectors, training children in fire safety, and coordinating with fire personnel during a crisis.

Community Emergency Response Team (CERT)

This FEMA-backed program helps to educate individuals on disaster preparedness. Besides that, the program trains people in necessary response skills to support their communities in crisis. CERT training can include fire safety, search and rescue, team organization skills, and disaster medical operations. As a national program, CERT provides a consistent and thorough approach to assisting emergency responders. Even more, you can take training classes throughout the year with CERT. Training includes emergency response skills range from individual preparedness to community preparedness and awareness. Occasionally, CERT volunteers assist with non-emergent tasks.  With over 2,700 local CERT programs across the country, finding a local organization to expand your preparedness skills is one of the best ways to help your community.

Ham Radio Clubs

After a major disaster, you may not have much luck with your cell phone as a means of communication. Between damaged infrastructure, an overwhelming call surge, and the number of users clogging up the networks, you could be left stranded without a way to communicate with the outside world. Joining a Ham Radio club is an excellent way to learn about alternative communication methods. Ham Radio can be used virtually anywhere and does not require the use of the internet or cellular signals.

Supporting other Community Members

First Aid Training

CPR training and basic first-aid skills are vital to community preparedness. Consequently, your skills could provide valuable extra time for emergency response teams or streamline the triage process for emergency response teams. The American Red Cross, the American Heart Association, and other Citizen Corps affiliates offer CPR and first-aid training for the public.

“You are the Help Until Help Arrives” Program (Until Help Arrives)

“You are the Help Until Help Arrives” is a government-backed program that educates and empowers community members to take action by providing lifesaving care before the emergency responders arrive. Until Help Arrives has online and in-person training sessions so that citizens can respond quickly and, potentially, save a life after an earthquake or another disaster. Furthermore, this training could make a difference for you when preparing your family for earthquakes safety.

Disaster Relief Organizations

After a disaster, there will be a massive demand for resources beyond emergency responders. You can volunteer for organizations that support the community in other ways. Two such organizations are:

Meals on Wheels is a program that delivers food to senior citizens who may not have emergency supplies ready for a disaster. Likewise, volunteering for community food banks helps provide resources and supplies during a time when food may be scarce.

Start a Preparedness Group for your Neighbors

Above all, it is a good practice for you and your neighbors to have an earthquake response plan. Preparation may include creating a phone tree or attending a training program together. The more self-sufficient you and your neighborhood can be, the more efficient emergency response teams can be during a crisis.

Community Preparedness Resources

For more information, this toolkit may help map out detailed steps to a community preparedness strategy. As always, the best way to help your community is to first prepare yourself and your family for the next earthquake.

Financial Preparedness [Step 3]: Debt and Deductibles

How would an earthquake impact my budget and my income?

So far, we’ve covered an emergency savings fund and insurance as part of financial preparedness planning. However, there is still one hidden danger in your earthquake financial plan that could blow up your budget. You could be facing a loss of income that will make your seemingly insignificant debt suddenly feel like a mountain.

Financial goal priorities include getting out of debt
Financial goals to reach Emergency Preparedness and Security

How would an earthquake impact my income and budget? This question could be the scariest point to consider of your Financial Preparedness Score. An earthquake can impact a rather large area in a matter of minutes. Consider these factors:

  • Did the earthquake injure you? If so, will the injury or injuries allow you to return to your work in the future?
  • Was your place of work damaged by the earthquake?
  • Will your place of work continue business after the earthquake?
  • Will you need to care for a family member after the earthquake?
  • Did the earthquake damage your vehicle? Are the roads safe to drive?

Obviously, right after an earthquake, you aren’t thinking about work. These factors, among others, will impact whether or not you will be able to work. After an earthquake, you may experience a drop of income while simultaneously seeing an increase in your expenses. Your emergency savings fund will help keep life as normal as possible, but you should also think about a plan for the long-term.  You may not be able to prevent a loss of income after a natural disaster, but you can take steps now to minimize the damage it does.

Two Words: Debt and Deductibles.

Balance your debt with your savings
Financial Preparedness can feel like balancing act, but the payoff is worth it.

Minimize your Debt.

One of the quickest ways to struggle after a loss of income is to get stuck with a credit card bill that you can’t pay. What hurts even more about debt is how a missed payment (or a few) can really hurt your credit score for a very long time. Assess how much debt you have today. If you take stock of your debt to income ratio and are concerned, then you can only imagine how stressful it would be to have that same amount of debt without an income or a fraction of your typical income.

Some debt, like your mortgage or your student loans, may not be something you can tackle quickly–that’s okay! Experts recommend making a list of your debts and making a plan to pay them off one by one–preferably from the smallest to the largest or from highest to lowest interest debts. This will require that you make a budget and stick to it. Minimizing your debt will make your emergency savings fund last much longer after a natural disaster. If you’re like most families, your student loans and mortgage will be the last items on the list of debts to pay off compared to your high-interest debts.

Prepare for deductible payments.

Once you have made it to this point, you’re really getting to a place of financial preparedness. You have some money saved, you’re working your way through debt, and you have insurance in place to cover what you can’t afford to self-insure. Great work!

The last part step is to review your deductibles for insurance coverage. There are a couple of ideas behind this simple step:

  • Is my deductible an amount that I can reasonably pay for?
  • Will it benefit me to change my deductibles?

It may be tempting to increase your deductible so that you can reduce your monthly premium payments. Do not give into this temptation until you have assessed how much you can reasonably cover when it comes time to pay the deductible.

In addition to your emergency savings fund, you’ll need to develop a plan to pay deductibles after an earthquake. This may mean a Health Savings Account if you’re worried about medical payments, or it could mean establishing an investment account as a long-term strategy to help meet a deductible on your earthquake policy.

You may not be able to save for every deductible payment, but you should be aware of how your post-disaster budget will look in light of these payments. Reviewing your current deductibles and assessing your financial preparedness will ease the shock when it the unexpected strikes.

Do you have any other financial preparedness tips? Let us know in the comments below!