This week's
earthquakes in Hawaii prompted me to take a look at how many Americans have earthquake insurance and how many others might need it. Homeowners, renters and business insurance policies do not cover damage from earthquakes. This poses a problem not unlike the one faced by people living in coastal or flood-prone areas. Just as they need specific flood insurance, people in quake-prone areas need quake insurance.
Since the beginning of the 20th Century, earthquakes have occurred in
39 states. Approximately 90 percent of Americans live in areas
considered seismically active. Even so, only a small percentage of
people purchase earthquake insurance.
What's the risk? Probably higher than you think. And it's growing.
FEMA calculated in 2000 that annual losses due to earthquakes in the United States are about $4.4 million.
The Insurance Information Institute says:
The [FEMA] report ... points out that the potential cost of earthquakes has been growing because of increasing urban development in seismically active areas and the vulnerability of older buildings, which may not have been built or upgraded to current building codes. According to the study, 84 percent of the nation's annual losses are expected to occur in:
... Other areas at risk include the central United States, within the
New Madrid Seismic zone, which includes parts of:
- and the Charleston, S. C. area.
In addition to California metropolitan areas, cities ranked among the top 40 high-loss potential urban areas include:
The study pointed out the need for increased recognition of metropolitan areas with "low seismic hazard" but "high seismic risk," such as New York City and Boston, which have high concentrations of buildings and an infrastructure that was built without taking into account seismic codes. Although the likelihood of catastrophic quakes occurring in these areas is statistically low, the potential cost is very high. In addition, because of the perception of low risk, neither the public nor the private sector has developed earthquake preparedness programs that teach people how to protect against earthquake damage and injury.
In the continental United States, earthquakes occur most frequently west of the Rocky Mountains. While the United States experiences only 2 percent of the world’s earthquakes, some 90 percent of its population lives in seismically active areas. Statistics show that since 1900, earthquakes have occurred in 39 states and caused damage in all 50 states. More than 3,300 Americans have died in earthquakes during the last century.
Historically, the most violent earthquakes have occurred in the central United States.
The largest earthquake in the continental United States was along the New Madrid Fault in Missouri, where a 3-month long series of quakes in 1811-1812 included three quakes larger than a magnitude of 8. The state with the most major earthquakes is Alaska, but the one with the most damaging earthquakes is California.
How expensive is quake insurance? The Insurance Information Institute says:
[D]eductibles can range from 2 percent to 20 percent of the replacement value of the structure. This means that if it cost $100,000 to rebuild a home and there was 2 percent deductible, the consumer would be responsible for the first $2,000... Insurers in states like Washington, Nevada and Utah, with higher than average risk of earthquakes, often set minimum deductibles at around 10 percent. In most cases, consumers can get higher deductibles to save money on earthquake premiums. [...]
Premiums also differ widely by location, insurer and the type of structure that is covered. Generally, older buildings cost more to insure than new ones. Wood-frame structures usually benefit from lower rates than brick buildings because they tend to withstand quake stresses better. Regions are graded on a scale of 1 to 5 for likelihood of quakes, and this may be reflected in insurance rates offered in those areas.
The cost of earthquake insurance is calculated on [a] "per $1,000" basis. For instance, [insuring] a frame house in the Pacific Northwest might cost $1 to $3 per $1,000 worth of coverage, while it may cost less than fifty cents per $1,000 on the East coast.
[Insuring] a brick house would cost approximately $3 to $15 per $1,000 in the Pacific Northwest, while it would cost between 60 [and] 90 cents in New York. Earthquake insurance is available from most insurance companies in most states.
Washington state's insurance commissioner gives this advice:
Unlike most homeowner or tenant policies, earthquake insurance primarily covers major losses. It normally is sold with deductibles equaling 10 to 25 percent of the structure's policy limit. Recently, the industry trend has been to raise deductibles.
This limit works much like the deductibles on your auto insurance. The result is that the insurance pays only for damages that exceed the deductible. However, unlike car insurance, some earthquake policies treat contents and structure separately. This means the deductible amount applies separately to the:
- Total amount of the loss for contents
- Total amount of the loss for the structure
- Total amount of the loss for unattached structures like garages, sheds, driveways or retaining walls
Not all policies are alike. You should compare the coverage differences between companies to get the coverage that best meets your needs.
See a list of the 10 costliest quakes in the United States.
Talk-Radio Summit
If it sounds like your local talk-radio program is sounding very Republican on Tuesday, Oct. 24, there might be a reason.
The Bush administration is holding a talk-radio summit that day, and will give dozens of radio hosts access to administration officials. Some radio programs will even be setting up booths on the White House grounds. The New York Times says the summit is a last-minute Republican campaign push before the mid-term elections, prompted by some conservative talk show hosts' breaking with Republicans on issues such as immigration and the Foley scandal.
Gift-Card Reform
Stateline.org has a story that is perfectly timed for the holiday shopping season on the horizon:
At least 25 states have strengthened their consumer protections for the credit-card-sized scrip that more Americans now give in lieu of a hand-picked, boxed-and-bowed gift, according to the National Conference of State Legislatures. U.S. shoppers are expected to spend as much as $72.8 billion in 2006 on gift cards. But only in three states can consumers be guaranteed that their gift cards will be worth full value when they go to spend them at a store, restaurant or online.
Around the country, expiration dates and "processing fees" are the bane of gift card users. Shoppers might find the value of their cards eaten away by fees charged by retailers and banks -- or stripped to zero if too much time elapses between when the cards were purchased and redeemed.
Starting in 2004, lawmakers in many states began responding to consumer complaints by introducing bills that would have [forbidden] all fees and made the cards' value perpetual. But that type of legislation rarely survived, and today only Connecticut, Montana and Rhode Island prohibit all fees and expiration dates. California, which started the movement with its gift card law of 1996, prohibits expiration dates but allows fees in certain circumstances.
More typical is Kansas' new law, an example of the compromises that lawmakers and business groups often reach on the gift card question. Sponsored by state Rep. David Huff, a Kansas City-area Republican, the idea for the law came in 2003, after one of Huff's constituents bought his wife a $100 gift card to a spa and the card expired before she could redeem it, meaning the money was lost.
The Consumers Union has a summary of
state gift card laws.
BankRate.com explains
important gift card lingo, including the precise meaning of "service fees."
Stateline explains another thing or two that you should know about gift cards:
There are two main types of gift cards: store-issued cards that work like cash when redeemed at cash registers or online, and cards issued by banks and credit businesses such as Visa or American Express that can be redeemed anyplace that takes credit cards.
Retailers' groups say that the fees go to third-party vendors who handle and process the cards, and complain that the variety of different state regulations can confuse consumers. Advocates for bank-issued gift cards say fees and limited-use dates help keep the cards' overall costs down for consumers. Unlike retailers' cards, banks and credit card companies charge an upfront fee for gift cards in addition to the value buyers add.
Some large retailers, including Wal-Mart, Target and The Gap, voluntarily don't charge service fees or impose expiration dates on their gift cards. Chain restaurants also avoid the restrictions, according to the National Restaurant Association; even if restaurant patrons wait a few years to redeem a gift card, they tend to spend more money than the card is worth.
Banning Dishes From View
In Boston, the city council is considering a bill that would ban satellite dishes from the front of buildings. I am only surprised that it has taken so long for this to bubble up.
The Boston Globe reports:
The proposal to restrict them has plenty of backers in a city where architectural preservation is king. But there is also an angry outcry, particularly in immigrant communities where satellite television is often a main link to news and culture in far-away native countries.
Does your city have rules about satellite dish placement? Does anybody enforce them?
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is a compendium of ideas, edited story excerpts and other materials
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When the information comes directly from another source, it will be
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original sources cited. Errors and inaccuracies found will be corrected. Hey.. great tips on earthquake insurance. And there's an even...
