MEMPHIS (WMC TV) - Dateline NBC recently reported there is a 1-in-10 chance in the next 50 years that an earthquake will rock the Mid-South.
After the disaster in Haiti and the occasional shake, rattle and roll we sometimes feel from Reelfoot Lake down the New Madrid Fault line, a few of you have been e-mailing me about earthquake insurance.
"Anonymous" from Memphis wrote:
"I along with many others had it for years as part of our homeowner's policy, but after Katrina, insurers like Allstate dropped coverage. Does it make sense to purchase earthquake insurance, or is it a 'rip-off'?"
My sources at Allstate and State Farm told me most -- if not all -- insurance companies require earthquake coverage to be a SEPARATE SPECIAL POLICY with its own premium.
It usually requires what's called an "ENDORSEMENT" through your homeowner's policy.
"State Farm offers their coverage through an endorsement, which in addition to providing earthquake coverage to your structures, among other things, it also offers (coverage for) additional living expenses," said State Farm Memphis agent Kathy Thurmond-Edwards (http://online2.statefarm.com/b2c/sf/agent/42/1880).
Germantown/Cordova Allstate agent Michael Heffernan (http://www.allstateagencies.com/MHEFFERNAN/AllstateProducts/article.aspx?binderid=191498483160&prodid=4) said earthquake coverage carries HUGE DEDUCTIBLES -- as much as 15 to 20 percent of your home's value.
Insurance sources also said most existing homeowners' policies already cover FIRE DAMAGE caused by earthquakes.
So earthquake insurance is basically a crap shoot.
And if Hurricane Katrina is any indication, when the "big one" really does rock the Mid-South, insurance companies will likely have trouble paying anyway due to overwhelming claims.