Quake insurance: Get it if you can

by:  Candace Jennings, Scot Gelfand

Lake Oswego insurance agent Candace Jennings has some unique advice about earthquake insurance.

'If you can get it, get it. If you can't get it, you need it.'

That poses something of a dilemma, especially after the recent earthquake in Japan.

'After something like that you always get more people at least inquiring about getting earthquake insurance,' said West Linn insurance agent Scot Gelfand. 'They at least want to know if they can get it and how much it will cost.'

Lake Oswego homeowners can be sure of one thing: An earthquake will occur here. The only question is when.

'There are faults all over Lake Oswego,' said Phil Sample, city fire marshal. 'It could happen in the next five minutes or it could be in 50 to 100 years.

'You can't predict or tell just when it is going to happen. Some people say we are past due to have an earthquake.'

In any case, it is certain that having an earthquake insurance policy is the best policy. But unlike in California, where companies are required to make earthquake insurance available to every homeowner, Oregon insurance companies do not have to offer it. And fewer of them are doing so.

'Some companies haven't pulled out,' said Jennings, whose company Jennings Insurance Agency handles seven carriers. 'For some of them offering earthquake insurance is too much risk on the books. Even Safeco has created a separate policy on earthquakes that requires a 15 percent deductible.

'There's more stringent underwriting now. Companies have become very careful. It used to be a lot easier. If your house is worth over $700,000, some companies won't write it.'

Gelfand, of Gelfand Insurance, said, 'Companies ask if homes fit the right mold. Where is its location? Is it on a hill, built on stilts or piers, or near water? Some companies are backing away, and the ones that maintain earthquake insurance are doing research on faults and home surveys.'

One of the major issues is when a house was built. Gelfand and Jennings noted that houses built before 1975 have much more difficulty acquiring earthquake insurance.

'Many houses built before 1975 were not bolted into their foundations,' Gelfand said. 'It was wood sitting on wood. Most insurance companies assume a house is not connected to its foundation if it was built before 1975.'

Jennings said, 'Companies require that older houses have their frames retrofitted and strapped into their foundations.'

A customer with an unattached house who buys earthquake insurance will pay a big price if an earthquake actually hits.

'You can buy earthquake insurance without being retrofitted,' Gelfand said, 'but a company won't pay if it's found out. It is very, very important to make sure your house is attached to the foundation.'

That may discourage people who have acquired a sudden interest in earthquake insurance after what happened in Japan. But by no means is all of the news bad.

'Most people taking earthquake insurance are finding it's not that expensive,' Jennings said. 'Most of my clients are seeing that it's not that expensive, and most of them get it.'

As an example, Jennings said, 'For a $619,000 house the home insurance coverage costs $2,542 -$600 of that is for earthquake coverage.'

That being the case, Gelfand has a tip for homeowners shopping for earthquake insurance.

'Not all policies are created equal,' he said. 'Some companies have downsized their earthquake coverage, some still offer full coverage, others have raised the deductible from 10 to 15 percent. Changes made are often not clear to the insured person.

'A side-by-side comparison of earthquake insurance policies is recommended. The customer should know.'