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In the wake of a 5.8-magnitude earthquake that rattled much of the East Coast on Tuesday, many are wondering whether the area is financially prepared for a recurrence of such an event. Since the region is rarely hit with this type of natural disaster, insurance officials confirm that most homeowners do not carry necessary earthquake insurance.

Earthquakes Arent Covered by Homeowners Insurance

If you ask someone living in California whether theyve considered purchasing earthquake insurance, they will probably let you know they purchased it years ago. However, on the East Coast where earthquakes dont regularly occur, insurance experts say most homeowners dont even know that earthquake damage isnt covered by homeowners insurance policies.

Michael Barry, a spokesman at the Insurance Information Institute in New York, told Bloomberg that policyholders living outside of high-activity areas like California, Washington State and Missouri assume earthquakes are covered, but in actuality, they have to purchase earthquake coverage as a separate policy or an endorsement in an existing policy.

The only exception to this rule is if a policyholder has purchased a so-called floater that would insure items such as fine arts or other valuables, and specifically indicate they are covered if destroyed in a quake.

Should East Coast Residents Purchase Coverage?

With earthquakes occurring infrequently on the East Coast,  do they need to purchase quake coverage? Many experts say that it really depends on the homeowner. This type of coverage is not mandatory in any area, so it is up to the property owner to decide whether they want to protect their home against damage of this type.

Prices for coverage vary depending on the location and value of the home. As noted in the Bloomberg story, in New York, a policy from Chubb for earthquake insurance averages about $250 a year for a $500,000 home. In general, deductibles for earthquake policies can range from 5 percent to 25 percent of the overall value of the property.

For those who feel they can afford the extra cost, it doesnt hurt to explore the ins and outs of earthquake coverage and consider making the purchase to insure financial security in the event that another unexpected quake hits the area.

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