What do I need to make an Earthquake claim?
Choosing a deductible for your Earthquake policy
An earthquake can destroy a home and cause collapsing walls, flying glass, and falling objects. If an earthquake occurs, you should take the following immediate action:
- Take steps to protect yourself and your family.
- Promptly submit your claim by calling your agent or Earthquake insurance company.
- Protect the property from further damage.
- Keep accurate records of all expenses, such as temporary repairs and additional living expenses.
- Itemize the damaged or stolen property, including the manufacturer, brand name, age, place of purchase, and purchase price.
- Report burglary/theft claims to the authorities so there is a police report on file.
The final claim settlement is impacted by the deductible chosen when the policy is purchased. When selling Earthquake insurance, the size of the deductible is often misunderstood and can become a major reason a purchase isn’t made.
Clarifying Earthquake policy deductibles
The potential client may think that the deductible is the amount of damage that they are responsible for paying “out of pocket” before the insurance company will issue a check. This is not the case. The insurance company will handle the loss and apply coverage regardless of whether the insured has yet to pay the deductible or not.
It is important to know that the deductible for Earthquake insurance works differently than that for other types of like, such as auto insurance.
With Earthquake insurance from GeoVera, the deductible can range from 2.5% to 25%, depending on the product. The client may choose a larger deductible to lower their premium but without clarity on how the deductible works for an Earthquake insurance claim, they may believe they would need more money to make repairs than they have in savings.
Let’s look at a scenario for how a 10% deductible would work in the case of a loss:
As shown above, the earthquake loss is $300K, and the settlement paid to the client is $250K when the deductible is 10% ($50K). For other deductibles applied to the same loss, the settlements would look like this:
5% deductible $275K amount paid
15% deductible $225K amount paid
20% deductible $200K amount paid
In each case, the Earthquake insurance pays the insured for the claim amount minus the deductible amount without requiring the insured to have “spent” the money on the deductible yet. Deductibles apply, but they won’t hold up the claim.
How much Earthquake insurance do I need?
This common question has a complex answer. The cost of earthquake insurance can create a dilemma for individuals and families. While its protection is crucial, the financial strain of higher premiums and deductibles can lead to difficult decisions. Some homeowners might be hesitant to allocate a significant portion of their budget to insurance and purchase the cheapest earthquake insurance, especially considering the relatively low likelihood of a major earthquake.
Another consideration is the balance between affordability and risk tolerance. It’s crucial to analyze the cost of earthquake insurance versus the impact of not having coverage, which can carry even greater financial risks. The potential expense of repairing or rebuilding a property damaged by an earthquake can far outweigh the premiums and deductible.
There are many options to choose from when it comes to finding the best and most affordable Earthquake insurance. If you want to compare rates with different deductibles, do it today! QuakeInsurance by GeoVera makes quoting quick and easy.
