Estimated read time: 4-5 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
SALT LAKE CITY — Last month, KSL TV’s Matt Gephardt investigated whether earthquake insurance is worth the investment to Utah homeowners.
His question proved prescient.
After Wednesday’s 5.7 earthquake in Magna, which rattled Utah’s largest urban center, many homeowners will consider anew — is earthquake insurance right for me?
Earthquake insurance, which is not part of standard homeowner policies even in quake-prone areas, can seem like a lot of investment for a low-probability event. Deductibles are often higher than for average policies because risk is not spread among the population, but rather concentrated in specific areas. They range typically from 5% to 20%, according to the Utah Insurance Department, which can leave homeowners on the hook for thousands even with insurance.
But go through a catastrophic earthquake without it, and you could find your insurance offering no assistance at all.
"Utah is on the Wasatch Fault, which is a risk area," said Carole Walker, executive director of the Rocky Mountain Insurance Information Association. "So this is a wake-up call that Utah residents should at least consider purchasing separate earthquake insurance, or put on an endorsement of their policy when available."
Todd E. Kiser, commissioner of the Utah Insurance Department, said earthquake insurance is becoming more affordable, especially for certain homes.
"If your home is frame, earthquake insurance is pretty reasonable. It’s not very expensive," Kiser said. "… It takes a lot more to bring a wood building down than it does a brick building."
It’s important, Kiser said, to ask questions when shopping for earthquake insurance: not only how your home construction will affect your premium, but also what each policy covers specifically. For instance, he said, many earthquake policies don’t cover floods or mudslides, even when that mudslide follows an earthquake.
"If you live on a hillside, and you’re worried that the earthquake might shake the ground and make it unstable … and then you’re worried about the hillside collapsing, that product is available also."
He advised that Utahns shop around and compare coverages between different companies and agents. "I’d recommend that they talk to several agents and ask those hard questions," Kiser said.
He also reminded residents to catalogue their belongings so they can prove to insurance companies what they’ve lost in the event of a natural disaster.
Fabio Faschi, property and casualty team lead at Policygenius, said deciding on earthquake insurance might be "harder to gauge" in Utah than in, say, California, where earthquakes are more frequent.
"It’s always going to be hard for you to see the value in insurance until a claim happens, unfortunately," Faschi said. "And that’s just the nature of the beast, right? Nobody wants to pay for their insurance until you have to use it. And a big thing in terms of that evaluation is understanding what it is going to cover for you."
He said most earthquake insurance will help not just with home repair, but with replacing personal belongings and temporary living arrangements. The key, he said, is for clients to "understand what they’re getting," and to weigh the risk accordingly.
"I can never in a vacuum look at the price of an earthquake insurance policy and say, ‘Oh, that’s too expensive,’" Faschi said.
At the Insurance Information Institute, spokeswoman Janet Ruiz said earthquake insurance can be "a big investment," but that it "might not be as expensive as you think."
"So my encouragement is always to find out," Ruiz said. "Maybe it is completely affordable, and is a good thing."
She said Utahns should not only consider insurance but think about retrofitting older homes against earthquakes — which could, in turn, lower insurance premiums. "My encouragement is always to think about financially insuring your home because it is often your largest asset," she said. "And it’s worth every penny, if you have damage after an earthquake, to be able to rebuild."
It's worth noting that standard homeowner policies might not cover an earthquake, but they usually will cover a fire that might erupt after one. Also, insurers count the initial quake and the subsequent three days' worth of aftershocks as a single event (which is why Utahns can't buy a policy right now, as the event continues); shocks after that require a second claim, with another deductible.
Still, Walker said she hopes more Utahns will consider earthquake insurance in the days and weeks to come.
"While it might not happen today or tomorrow," Walker said, "we all want to think the unthinkable is never going to happen. However, there is an earthquake risk, as we saw yesterday (Wednesday) played out."
