Earthquake Insurance is a forM of Property Insurance that pays the policyholder in the event of an EarthQuake that cauSes Damage to Property. The most common policies homeowners insurance doesn't cover the loss of an earthquake.
Most earthquake insurance policies feature a high deductible, which makes this type of insurance useful if the house is destroyed, but useful, if the house is merely damaged. Rates depend on the location and the probability of an earthquake. The rates may be cheaper for wooden houses, which withstand earthquakes better than brick houses.
As with flood insurance or insurance against hurricane damage and other large-scale disasters, insurance companies should be careful when assigning this type of insurance, due to an earthquake strong enough to destroy a house will probably destroy dozens of homes in the same area. If a company has written insurance policies on a large number of homes in a particular city, then a devastating earthquake will quickly drain the resources of the company. Insurance companies devote much study and effort toward risk management to avoid these cases.
California
Earthquake insurance has become a political issue in California, whose residents purchase more earthquake insurance than residents of any other state in the U.S. After the Northridge earthquake in 1994, almost all insurance companies completely stopped writing homeowners policies altogether insurance in the state, because California law (the "mandatory offer law"), companies provide property insurance must also offer earthquake insurance. Finally, the legislature created a "mini policy" that could be sold by any insurance company to comply with the law of a mandatory bid, the loss of earthquake only due to structural damage should be covered, with 15% deductible. Claims for personal property losses and "loss of use" are limited. The legislature also created a quasi-public agency (privately funded, publicly managed) called the CEA California Earthquake Authority. Membership in the CEA by insurers is voluntary and member companies comply with the mandatory offer law by selling the CEA mini policy. Premiums are paid to the insurer, then pooled in the CEA to cover claims from homeowners with a CEA policy from member insurers. The state of California specifically states that no backup of CEA earthquake insurance, where claims that a major earthquake were to drain all CEA funds, nor will it cover claims from non-CEA insurers if would become insolvent due to earthquake losses.
Japan
The Japanese government created the "Japanese Earthquake Reinsurance", it's same Earthquake insurance scheme in 1966 and the plan has been revised several times since. The owners can buy earthquake insurance from an insurance company, an optional rider to a fire insurance policy. The insurers registered in the JER scheme who have to pay earthquake claims owners to share the risk between themselves and the government, through the JER. The government pays a much higher proportion of the claims if an earthquake of a single cause total damage of more than about 1 trillion yen ($ U.S. 8.75 billion U.S. dollars). The maximum payout in a single year for all taxpayers JER insurance demand is 4.5 trillion yen (about U.S. 39.4 billion U.S. dollars), if claims exceed this amount, then the claims are apportioned among all claimants.
New Zealand
New Zealand's Earthquake Commission (EQC) is a Crown entity that provides state-owned insurers in natural disasters to residential property owners in New Zealand. In addition to its role as insurance, CDC also conducts research and provides training and information on disaster recovery.
CCE was established in 1945 as the quake and War Damage Commission, as part of the Government of New Zealand, and was intended to cover the earthquake and war damage. Coverage is extended only time damage caused by earthquakes and war to include other natural disasters such as landslides, volcanic eruptions, hydrothermal activity, and tsunamis, with coverage for war damages after being removed. For residential land, storm and flood damage is covered. Extends coverage of fire damage caused by any of these natural disasters.
Most earthquake insurance policies feature a high deductible, which makes this type of insurance useful if the house is destroyed, but useful, if the house is merely damaged. Rates depend on the location and the probability of an earthquake. The rates may be cheaper for wooden houses, which withstand earthquakes better than brick houses.
As with flood insurance or insurance against hurricane damage and other large-scale disasters, insurance companies should be careful when assigning this type of insurance, due to an earthquake strong enough to destroy a house will probably destroy dozens of homes in the same area. If a company has written insurance policies on a large number of homes in a particular city, then a devastating earthquake will quickly drain the resources of the company. Insurance companies devote much study and effort toward risk management to avoid these cases.
California
Earthquake insurance has become a political issue in California, whose residents purchase more earthquake insurance than residents of any other state in the U.S. After the Northridge earthquake in 1994, almost all insurance companies completely stopped writing homeowners policies altogether insurance in the state, because California law (the "mandatory offer law"), companies provide property insurance must also offer earthquake insurance. Finally, the legislature created a "mini policy" that could be sold by any insurance company to comply with the law of a mandatory bid, the loss of earthquake only due to structural damage should be covered, with 15% deductible. Claims for personal property losses and "loss of use" are limited. The legislature also created a quasi-public agency (privately funded, publicly managed) called the CEA California Earthquake Authority. Membership in the CEA by insurers is voluntary and member companies comply with the mandatory offer law by selling the CEA mini policy. Premiums are paid to the insurer, then pooled in the CEA to cover claims from homeowners with a CEA policy from member insurers. The state of California specifically states that no backup of CEA earthquake insurance, where claims that a major earthquake were to drain all CEA funds, nor will it cover claims from non-CEA insurers if would become insolvent due to earthquake losses.
Japan
The Japanese government created the "Japanese Earthquake Reinsurance", it's same Earthquake insurance scheme in 1966 and the plan has been revised several times since. The owners can buy earthquake insurance from an insurance company, an optional rider to a fire insurance policy. The insurers registered in the JER scheme who have to pay earthquake claims owners to share the risk between themselves and the government, through the JER. The government pays a much higher proportion of the claims if an earthquake of a single cause total damage of more than about 1 trillion yen ($ U.S. 8.75 billion U.S. dollars). The maximum payout in a single year for all taxpayers JER insurance demand is 4.5 trillion yen (about U.S. 39.4 billion U.S. dollars), if claims exceed this amount, then the claims are apportioned among all claimants.
New Zealand
New Zealand's Earthquake Commission (EQC) is a Crown entity that provides state-owned insurers in natural disasters to residential property owners in New Zealand. In addition to its role as insurance, CDC also conducts research and provides training and information on disaster recovery.
CCE was established in 1945 as the quake and War Damage Commission, as part of the Government of New Zealand, and was intended to cover the earthquake and war damage. Coverage is extended only time damage caused by earthquakes and war to include other natural disasters such as landslides, volcanic eruptions, hydrothermal activity, and tsunamis, with coverage for war damages after being removed. For residential land, storm and flood damage is covered. Extends coverage of fire damage caused by any of these natural disasters.
