Focused on Risk

After hearing about the terrible earthquake in Japan, we have had several people ask us if earthquakes are covered under their normal homeowner insurance policy. The answer is no. They, along with floods are two big items that are excluded from homeowner coverage. With the pictures of the devastation in Japan all fresh in people’s minds, now may be a good time to think about getting earthquake coverage for your home. Close to 75 million people in 39 states face some risk from earthquakes. A prominent area for earthquakes is in the New Madrid Seismic Zone (see the dark orange spot on the map below, in West Tennessee and Arkansas). Nashville is within 3 hours of this increased risk area. According to the Insurance Information Institute, there is a 40% to 63% chance this zone will suffer an earthquake with a 6.0 magnitude in the next 15 years. Another increased risk zone in the Southeast includes Northern Georgia and much of South Carolina. The map details that Middle Tennessee is in Zone 1 which has a 7.5% greater chance of having a damaging earthquake than the green section. The darker yellow area has a 15% greater chance of having a damaging earthquake and the dark orange by Memphis has a 30% greater chance.

The New Madrid Seismic Zone is vulnerable to large, but infrequent earthquakes. There were several earthquakes of greater magnitude than 7.0 back in the 19^th century. Because they do not happen often, our building codes are not as stringent as other areas where earthquakes are more prevalent. Therefore, our homes, businesses, etc. would sustain much more damage from a smaller earthquake than buildings in California simply because they aren’t built to withstand an earthquake. In fact, FEMA estimated Nashville, Davidson County, and Murfreesboro in 2008 to have an annual loss from earthquakes of more than $15 million. Much of this would not be covered by insurance because less than 10% of people purchase the coverage.

Even small earthquakes under 4.0 on the Richter scale can cause major damage to brick exteriors. During an earthquake, the horizontal shaking forces can move a foundation back and forth while the frame moves in the opposite direction causing the structure to come loose from the foundation. This would be a costly repair of $100,000 or more.

Earthquake insurance depends on the zone you are in, as determined by each insurance company. It can cost anywhere from $100 to upwards of $500 per year. This may well be worth it based on the risk in our area and the amount of damage even a small quake can cause.