Jun 30 2010 6:00 AM

Do all homeowners need to buy earthquake insurance?

About 90 percent of Americans live in areas considered seismically active, but only a small percentage buy earthquake insurance. Standard homeowner's policies usually cover your property and possessions against damage from tornadoes, windstorms, hail and lightning; however, they don't cover earthquakes or floods.

If you buy earthquake insurance, get enough to cover the costs to rebuild your house and replace your possessions. Building costs can increase with inflation or after a disaster, when contractors and materials are in demand. New building codes also may make it more expensive for you to rebuild your home.

Earthquake insurance policies often carry a deductible, generally in the form of a percentage rather than a dollar amount, according to the Insurance Information Institute. Deductibles can range anywhere from 2 percent to 20 percent of your home's replacement value. If it costs $100,000 to rebuild your home and your policy has a 2 percent deductible, you would be responsible for paying the first $2,000.

To find out if you live in an earthquake zone, visit the Federal Emergency Management Agency’s Web site, www.fema.gov.

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Laura Adams is a personal finance expert and award-winning author who is Senior Insurance Analyst for InsuranceQuotes.com. She represents Bankrate Insurance’s web properties in the media and works as an advocate to make sure consumers protect their financial futures by having the right kinds of insurance.

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