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Earthquake Peril Isn’t Covered By Standard Insurance

The earthquake in Haiti showed that one of the world’s poorest nations was ill prepared for the disastrous consequences that can occur after a sudden, violent shaking of the earth’s surface. So, would a place like New York City be better prepared?

If preparedness includes having a home or business property insured against an earthquake, the answer is that New York is probably not prepared. Earthquake insurance accounted for only $15 million of the total $3.9 billion in premiums written by property/casualty homeowners’ insurers in the state in 2007. In 2008, the amount of earthquake policy premiums remained essentially the same.

“Many people are probably unaware that standard homeowners’, renters and business insurance policies specifically exclude covering damage caused by earthquakes. Coverage can be obtained, but it usually needs to be purchased as a separate policy or as an endorsement to an existing homeowners’ policy,” Insurance Superintendent James Wrynn said.

While New York City has significantly less frequent damaging earthquakes compared to a place like California, it is considered a region at high risk because of the city’s dense population and its concentration of buildings and infrastructure. Some scientists believe there is a greater risk than previously believed because of a series of subtle but active faults in the region.

Dozens of small quakes have been felt in the city. A magnitude 2.4 earthquake, believed to have been caused by a fault under 125th Street, occurred in 2001. Magnitude 5.0 earthquakes occur in New York about every century. (The earthquake in Haiti was 7.0.) In 1884, an earthquake centered off Rockaway toppled chimneys and its shock was felt from Virginia to Maine. New Yorkers have also felt shocks from earthquakes centered as far away as Canada.

The Federal Emergency Management Agency ranks the New York City among the top 40 high-loss potential urban areas in the country. The New York City Area Consortium for Earthquake Loss Mitigation, a group of public and private stakeholders including scientific and emergency management organizations, said in 2003 that even a moderate earthquake here could cause deaths and significantly impact the economy.

Unlike California, where residential property insurers must offer their customers the opportunity to buy earthquake coverage, property insurers in New York are not required to do so.

“People need to make informed decisions about buying any kind of insurance. They need to understand potential risks and their potential for financial loss should a disaster occur and then decide how best to protect themselves,” Wrynn said.

Earthquake insurance provides financial protection against the cost of damage to a structure caused when there is a sudden and rapid shaking of the earth’s surface. Policies carry a deductible, usually in the form of a percentage of the structure’s replacement value.

Premiums are based on the type and age of the structure being insured, as well as other characteristics, such as a structure’s proximity to known fault lines. The Insurance Information Institute says earthquake insurance for a brick home would likely cost between 60 to 90 cents per $1,000 of coverage in New York, compared to the Pacific Northwest where it would cost from $3 to $15 per $1,000 for a similar home.

While homes are not covered by standard insurance, cars and other vehicles are covered for damage caused by earthquakes under the optional comprehensive coverage part of an auto insurance policy.

Additional information about earthquake risks can be found on the websites of the Federal Emergency Management Agency,, and the U.S. Geological Survey (USGS),

Consumers with questions about insurance coverage should always first contact their insurance company, broker or agent. Consumers may obtain insurance information by accessing the Insurance Department’s website, or by contacting the Department’s Consumer Services Bureau from 9 a.m. to 4:30 p.m., Monday through Friday toll-free at 800-342-3736.


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