California is notorious for being part of “earthquake country”, but many people are unaware that Oregon and Washington are just as susceptible to earthquakes as California. Even though earthquakes can happen anywhere in the United States, the likelihood is significantly increased for residential properties located west of the Great Rocky Mountains as shown by USGS’s seismic hazard map. Homeowners in these at-risk areas are also risking great loss without the protection of earthquake insurance. California and Pacific Northwest homeowners are most at risk for high magnitude earthquakes, which can cause devastation and widespread destruction on a grand scale.
Coverage & Options
Rather than individual limits for dwelling, contents, loss of use, and other structures—as so many typical homeowner’s policies have—FirstMark Insurance provides a single limit of coverage. A single limit policy means greater flexibility at the time of loss by allowing you to use your coverage as you need it most!
FirstMark’s comprehensive earthquake insurance policy offers broad protection for your dwelling, other structures, personal property, and additional living expenses. Our comprehensive earthquake insurance policy comes with a 10% deductible in most areas—lower than most deductibles offered by other earthquake policy carriers.
How Coverage Is Calculated
After a large catastrophic event, such as an earthquake or wildfire, many homeowners realize that they do not have sufficient insurance coverage to rebuild their homes. Accurately calculating your replacement costs is crucial to ensuring that you will have the coverage you need for reconstruction after a significant loss. FirstMark Insurance Company uses industry-leading technology to determine accurate replacement costs for the homes that we insure.
The technology we use calculates reconstruction costs by using the interior and exterior characteristics of your home. Once we determine the amount of coverage for the dwelling, we then take time to assess what additional coverage is needed for other structures, contents of your home, and additional living expenses in the event your home is rendered uninhabitable after an earthquake. We place an emphasis on reconstruction because the cost for reconstructing a house after a total loss can be far different than constructing the same house as a new construction. In addition, we also account for the inevitable “demand surge”— a change in the price of materials, labor, and services as demand increases—that occurs after a widespread disaster.
Some factors included in reconstruction costs are:
- Extra costs for demolition and removal of damaged materials
- Bringing your home up to current building codes
- Availability of skilled labor; fewer contractors specialize in reconstruction than new construction
- Special features and materials often associated with older homes become more costly or are not readily available
- General Conditions (permits, fees, architect fees, etc.) and General Contractor overhead and profit
Also, FirstMark makes an annual adjustment to the replacement cost value to keep pace with changes in the reconstruction costs in your area.
How the Deductible Works
Policy deductibles are calculated as a percentage of the total single limit of coverage. As an example, if the single limit of coverage on your residential earthquake policy is $500,000 and your deductible is 10%, your deductible would then be $50,000.
In the event of an earthquake our expert claims adjusters will determine the dollar amount of the covered loss to your home, contents, other structures and factor in loss of use if your home is uninhabitable. Your deductible will be applied to the covered adjusted loss amount. Your deductible does not need to be spent on repairs to your home before your policy pays for your loss. Once the adjusted covered loss amount exceeds the deductible a payment can be made. For example, in our scenario, if the adjuster has determined that you have a covered adjusted loss amount of $300,000 you would be entitled to a loss payment of $250,000.
Why is the Deductible So High?
Earthquake insurance is specifically designed to cover large disasters with high losses. Given the evidence, there is a significant probability of a major earthquake in years to come. In order to make the premiums affordable, deductibles are much larger for earthquake coverage. The deductible helps guarantee the ability to provide affordable premiums while still giving you the coverage you need. Smaller claims will typically fall below the deductible, which also helps to keep premiums much lower than they would otherwise be.
The deductible is the amount that is deducted from the overall insured loss. This means that the policyholder does not have to pay any portion of the deductible out-of-pocket before receiving a claim payment.