Earthquake Insurance

Various types of risk from earthquakes are covered by an array of insurance policies, which cover properties and contents, life and health, workers compensation, and business interruption. The insurer is generally a commercial company whose business is selling policies and managing risks, as well as profiting returns for shareholders. The largest volume of earthquake insurance premiums is generated by commercial properties, which plays a significant social role in protection of commercial entities in a highly seismic region.

How Homeowners Earthquake Insurance Works

Homeowners can protect themselves from financial strains after an earthquake through purchasing homeowners insurance. Because earthquakes can often cause damage to a vast number of properties, household policies are written such that an insurer only pays for a damage above a threshold, known as a deductible or excess, which can sometimes be as high as 15% of the insured amount based on the building construction and region. In addition, co-insurance is sometimes required as a percentage of the damage above the deductible payable by the insured.

Facultative Insurance

A common type of earthquake insurance is facultative, which covers a business and its facilities. These include buildings, manufacturing plants, stocks and inventories, and loss of business due to a potential earthquake. Premiums are decided upon per individual business, where a high proportion of larger manufacturing businesses are covered in this way.