One of the most destructive natural disasters is the US is the earthquake. However, standard insurance like homeowners policies lack earthquake coverage, which could leave homeowners and business owners without the right policies especially rattled following an incident. Fortunately a Tennessee independent insurance agent can get you set up with adequate earthquake insurance, as well as homeowners insurance, to protect your property. But first, here’s a closer look at this coverage.

What Is Earthquake Insurance?

Basically, earthquake insurance is a contract between an insurance company and an individual or business owner in which the insurer agrees to cover losses relating to earthquake damage. Coverage is designed to protect your property’s physical structure or dwelling as well as your personal belongings or inventory if it gets damaged or destroyed by an earthquake.

Earthquake coverage is not included in standard homeowners, renters, or business owners insurance policies in Tennessee. Sometimes earthquake coverage is available as an endorsement that can be added to an underlying policy, such as homeowners insurance, but it may also be purchased as a separate coverage entirely. Your Tennessee independent insurance agent can help ensure that you get set up with all the earthquake coverage you may need.

What Does Earthquake Insurance Cover in Tennessee?

Similar to homeowners and business owners policies in Tennessee, earthquake insurance is designed to protect both your home/business and your stuff/inventory. But since both of these standard policies exclude earthquake damage specifically, that’s where earthquake insurance steps in to fill the void.

Earthquake insurance is designed to cover the following:

  • Damage to/loss of your home or business: Known as “structural coverage,” this includes the foundation of the building (also known as the “dwelling”), electrical systems, indoor plumbing, built-in appliances, and any additional flooring like carpeting. Detached structures like sheds are often covered as well.
  • Damage to/loss of your stuff or inventory: Known as “contents coverage,” this includes furniture (built-in and free-standing), smaller/not built-in appliances, some food, valuables, and clothing. For businesses, this coverage usually includes inventory.

It’s important to note that any depreciation of your property's value will be factored into what an earthquake insurance policy pays towards reimbursement for damages, depending on the type of claim filed. Certain types of claims only qualify for actual current cash value reimbursement, while others qualify for the full original replacement cost.

What Does Earthquake Insurance Not Cover in Tennessee?

While earthquake insurance provides a lot of protection, it’s not designed to cover all types of damage resulting from these disasters. The good news is that many of the exclusions under earthquake insurance policies are actually covered by standard homeowners or business owners policies in Tennessee.

Commonly excluded perils under earthquake insurance in Tennessee include the following:

  • Fire damage: Standard homeowners policies already include coverage for fire damage, even if the fire occurred as a result of an earthquake. As a result, coverage is excluded in earthquake insurance policies.
  • Vehicle damage: If you have comprehensive auto insurance, your vehicles should already be covered against earthquake damage. Work with your Tennessee independent insurance agent to ensure that your auto insurance provides this coverage, since earthquake policies do not protect your vehicles. You may choose to purchase more/different auto insurance if your current coverage is lacking protection.
  • Flood damage: In the event that a flood occurs after an earthquake, unfortunately earthquake insurance does not provide coverage for damage caused by flooding from outside your home. So, if a sewer bursts or a lake overflows and floods your home, your earthquake policy won’t provide coverage. You’d need a separate flood insurance policy for that.

On the bright side, standard homeowners policies in Tennessee do cover additional living expenses in the event you’re forced to live elsewhere temporarily while repairs are being made on your home following an earthquake. Also, standard business owners policies in Tennessee come with protection for interruptions leading to lost revenue.

What Are the Benefits of Earthquake Insurance in Tennessee?

The most obvious benefit of earthquake insurance is that it provides critical protection against property damage due to earthquakes. That being said, there are a couple of important benefits to having an earthquake insurance policy in Tennessee:

  • Protection for your home or office building’s structure: Earthquake insurance policies provide protection against property damage to residential homes and office spaces or storefronts that’s caused by earthquakes. This coverage is specifically excluded in standard homeowners, renters, and business owners policies in Tennessee.
  • Protection for your belongings or inventory: Earthquake insurance policies also provide protection lacking in standard homeowners or business owners policies in Tennessee for earthquake damage to your personal belongings or business inventory.

Earthquake damage can cost homeowners or business owners in Tennessee hundreds of thousands of dollars for repairs, replacements, and rebuilds. Having the right earthquake insurance policy can mean the difference between financial recovery and having to close a building’s doors permanently.

What Are the Risks of Not Having Earthquake Insurance?

There are obvious pros to having earthquake insurance coverage, and even a couple of glaring cons to not having it as well. The following risks associated with not having earthquake insurance might further inspire you to hunt for your own policy:

  • Bankruptcy: Having to pay for earthquake damages out of pocket could send a home or business owner into bankruptcy, fast. Earthquake insurance helps businesses stay afloat following a disaster and allows homeowners to rebuild/repair and keep their home.
  • Exclusions under other policies: Since standard homeowners and business owners policies in Tennessee specifically exclude earthquake damage, and earthquakes are indeed a threat to both residents and professionals in the state, it’s important to have a policy that fills the void.

In order to avoid serious risks like bankruptcy and coverage exclusions under standard insurance policies, consider working with your Tennessee independent insurance agent to get an earthquake insurance policy. When it comes to protecting your property from a severe shakedown, it’s much better to be safe than sorry.

Do I Need Earthquake Insurance in Tennessee?

While it’s not required by law, if you’re concerned about potential earthquake damage to your home or business, it’s a really good idea to have it. Tennessee is one of 16 states at highest risk of earthquakes in the country, so that may further inspire you to look into getting a policy. The New Madrid Seismic Zone, which is a source of severe earthquakes, extends right through Tennessee. Considering this, earthquake insurance may sound even more appealing.

How Much Does Earthquake Insurance Cost in Tennessee?

Really, the cost of a earthquake insurance policy depends on a number of different factors like location, your area’s earthquake history, and more. Properties located within zones deemed to be at high risk of earthquakes will pay significantly more for coverage than those located in calmer areas. So basically, the more likely you are to need the coverage, the more you’ll pay for it.

That considered, the average cost of earthquake insurance policies in the US currently, for most states, is between $100 and $300 annually. However, higher-risk states like California pay significantly more, with averages closer to $800 per year. A Tennessee independent insurance agent can help you find more specific earthquake insurance costs in your area.

Why Work with a Tennessee Independent Insurance Agent?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your area code? Independent insurance agents act as your own personal insurance shoppers, offering you tons more options than one-policy companies. With just one call, they’ll hook you up with multiple quotes.

Tennessee independent insurance agents are armed with knowledge on what coverage is needed in your area, and they’ll get you set up with just enough of it — not too little, not too much. They’ll handle all the heavy lifting, so you can rest assured you’ll be set up with the right coverage at the right price.

They’re not just there at the beginning either. If disaster strikes, your Tennessee agent will be there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to. Now that’s thinking ahead.

Author | Chris Lacagnina

Article Reviewed by | Paul Martin

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