Some may find earthquake insurance hard to buy

Bruce Rushton

Don’t bother checking your standard homeowner’s policy.

If you haven’t signed up for earthquake insurance, you don’t have it, insurance agents say. Earthquake coverage isn’t very popular in the Springfield area, experts say, and buying it is getting tougher in southern Illinois, where insurance companies have become wary of the New Madrid fault.

“There are several companies that do not place coverage in southeastern and southern Illinois,” said Julie Hearring of Olney, whose agency sells insurance at the epicenter of Friday’s quake. “When you get to, maybe, right below Interstate 70 -- Effingham and below -- it’s becoming an issue. The farther south you go, the greater the risk.”

Hearring said most of her customers have earthquake coverage. But coverage is rare in Springfield, said Dennis Garrett, executive vice president of the Professional Independent Insurance Agents of Illinois.

That could change, said Garrett, whose son sells insurance in Taylorville.

“He said, ‘I’ve had several calls coming in from people asking whether they have it or please add it,’” Garrett said.

Garrett said earthquake coverage on his Springfield house, which is insured for $280,000, costs $80 or $90, and that includes an in-ground swimming pool.

Costs are typically more for homes built of brick, he said. Unlike insurance that covers damage from fire or thieves, deductibles for earthquake insurance are calculated on a percentage of a home’s value. As a result, they are typically steep.

“In Illinois, it’s five or ten percent of a building,” Garrett said. “There may still be some (companies) that write it at two percent.”

Policies don’t take effect as soon as contracts are signed and money given, Garrett said. Rather, homeowners who take out policies get coverage only after seven days pass.

Even in earthquake country, many homeowners pass on quake coverage. In California, where any company that sells home insurance is also required to sell earthquake coverage, just 12 percent of homeowners have earthquake coverage, according to the Insurance Information Institute, an industry group.

Most Californians who have earthquake coverage get it through the California Earthquake Authority, a government agency that administers quake coverage. The insurance institute says the amount collected in premiums by the CEA went down by nearly 10 percent between 2005 and 2006.

Bruce Rushton can be reached at (217) 788-1542.