SALT LAKE CITY, Utah — The Wasatch Front is poised to have a large earthquake in the next 50 years. Lynn Attwood, of Salt Lake City, wanted to know: is it worth it to get earthquake insurance coverage?

Won’t Homeowners Insurance Cover Me?

Attwood lives in an unreinforced brick home that was built in 1949. “There were no seismic design requirements back then,” he said.

This instability had Attwood questioning if he should pay to get earthquake coverage, as a quake could be financially catastrophic for him.

Earthquake damage is not covered as part of your standard homeowners’ policy. Utah Insurance Commissioner Todd Kiser said earthquakes are one of several standard exclusions.

“The reason that they’re exclusions is because insurance companies have long said if there is catastrophic loss, there’s a possibility it could put insurance companies out of business,” he said.

Ins and Outs of Earthquake Insurance

“The Insurance Department would recommend that all consumers have earthquake insurance,” Kiser said. According to the Insurance Information Institute, only eight percent of homeowners nationwide carry earthquake insurance. Here in Utah, the number is closer to 14%.

While earthquake coverage is an additional expense, the good news, Kiser said, is costs have come down compared to years past. He said policies can range from $500 to $1,000 annually. Just three years ago, Kiser said his personal earthquake insurance coverage “was about twice as much.”

What you pay in earthquake coverage premiums also varies depending on your home’s construction materials. “A frame dwelling that’s going to shake is going to be significantly less than a solid brick building, that when it shakes, is probably just going to crumble and fall,” said Kiser.

Earthquake insurance also comes with a higher deductible, averaging around 10%. This means, if your home, valued at $300,000 for reconstruction, is destroyed, you would pay $30,000 out of pocket for the repairs. Kiser said that deductible can range from five percent to 25%.

As you’re shopping for policies, read the fine print. Not all policies cover the same types of damage.

“Some earthquake policies will not cover mudslide,” said Kiser. “Some policies will cover mudslides, so if you have an earthquake that brings mudflow down into your home, some companies will cover.”

In his research, Attwood found another variation: aftershocks.

“The major shock…is considered one event,” he said. “If there’s aftershocks that happen, they’re covered for three days. But in a lot of news accounts I’ve heard about earthquakes, the aftershocks continue much longer than three days.”

That specific policy would mean additional events, which means another 10% deductible on claims.

Will FEMA Help Me?

“I think there’s probably a lot of people that haven’t even looked into earthquake insurance,” said Attwood. “[They] just assume the government’s going to take care of them.

We reached out to the Federal Emergency Management Agency to see just how much they assist in massive disasters. While FEMA “does administer the National Flood Insurance Program which offers flood insurance policies,” they do not offer earthquake insurance.

In order for FEMA to get involved, the President of the United States must federally declare a disaster. Once that happens, “FEMA may support a state, territory or tribe to provide individual assistance to earthquake survivors.”

This could include emergency or temporary shelter costs, and even repairs to your home.

To get that assistance, you’d need to apply for a Small Business Administration loan. This is a low-interest loan and is governed by standard lending practices like checking your credit score before awarding the loan.

It’s also a loan, meaning you would pay it back over time. The maximum amount you can get through this type of loan is $200,000.

There’s no guarantee FEMA will cover the entirety of your damage. According to the initial disaster assistance response to Hurricane Maria, “SBA approved 40,246 of the 86,598 processed loan applications, totaling approximately $1.5 billion. Of the 40,246 approved, 17,491 loans, totaling $338,526,600, or about 22%, were disbursed.

This report is dated July 2018. Hurricane Maria happened in Sept. 2017. This means about 46% of loan applications were approved in this disaster, and the average loan was $19,354.33.

According to FEMA’s website, the Individual Assistance Program is “not a substitute for insurance and cannot pay for all losses caused by a disaster. It is intended to meet basic needs and help you get back on your feet. FEMA is not empowered to make you whole.”

Utah Quake Damage “Would Create An Incredible Financial Burden”

FEMA has ranked Utah sixth in the nation on what it would cost to assist in an earthquake event. It estimates over 31,000 people would be displaced in a 1,000-year event. It also estimates losses in Utah at $124,637,000.

“If there were a strong earthquake that shook homes and did significant damages to your home, we could have upwards of 80-to-90% of homeowners and businesses without coverage, and that would create an incredible financial burden upon people,” Kiser said.

As for Attwood, he said he’s “probably going to pull the trigger” on buying earthquake coverage for his home.

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