Is earthquake insurance coverage worth it? It depends

ANCHORAGE (KTUU) — Homeowners in Southcentral Alaska are tallying up the damage as the dust settles and aftershocks continue to rattle the area following the Nov. 30 earthquake.

Insurance claims have spiked in subsequent days according to the Alaska Department of Commerce, Community, and Economic Development's Division of Insurance.

Anchorage homeowner Ayyu Qassataq is in the process of filing her insurance claim after her home was declared a total loss — meaning it will cost less to tear down and rebuild than to repair. Qassataq was incredulous when she heard what it will cost before her earthquake coverage kicks in.

"When they told me that my deductibles were 20 percent of the cost of my home I almost fell out of my chair," Qassataq said, finishing with a laugh.

Qassataq has extensively documented the loss of her home on Facebook. Her step-by-step documentation is providing other homeowners with a how-to guide for handling structural damage from a strong earthquake. She says the learning curve she's experienced while going through the claims process has been more overwhelming than she anticipated, and she wants to help other homeowners experiencing damages.

"As I was going through that process, I was just thinking, 'I'm sure that other people are also navigating this system,'" Qassataq said. "And as I'm learning, if I can help other people to understand and learn along with me that would be helpful."

According to Qassataq’s posts, it started with an inspection from a structural engineer on Dec. 4, which found serious damage. A parting wall failure caused her home to physically separate from an adjoining home.

The inspection determined the house was vulnerable to total collapse in the event of another strong earthquake, and Qassataq was advised to pack her bags and leave that night.

On Dec. 6, a structural inspector and on-site Municipal officer posted a “restricted use” sign following a second inspection, cautioning that aftershocks may increase the risk of further damage.

The Municipal inspection team encouraged Qassataq to get final word from a civil and structural engineer before moving forward. She stayed in the home, though she was afraid for her children’s safety.

Throughout the inspection process, which led to the determination on Dec. 7 that her home will need to be torn down, Qassataq worked with her home insurance company to assess the dollar amount.

“I am continuing to work with my home insurance company, but it will be quite a process,” Qassataq said in a Facebook post on Dec. 6. “My deductibles for damage repairs are $45k, and $9k for living expenses. I keep reminding myself to be thankful I have insurance, and that it will all come together in a good way in the end.”

But is it actually worth it to have earthquake insurance? According to State Farm Agent Tom Plooy, the endorsement on his earthquake coverage as a homeowner is 20 percent, meaning the deductible is 20 percent of the full coverage plan.

So if your home is worth $300,000, your deductible would be $60,000. While that is a big number to consider paying out of pocket, Plooy says it’s ultimately a matter of minimizing losses.

“If you have a mortgage on your house, it may seem like a high deductible, but when you add all the structure itself, then all the contents, you could be at $900,000-$1 million, and everything over $140,000 would be covered,” Plooy said.

The ultimate question, Plooy says, is can you afford the full-value loss of your home? For many, the answer is no, but the cost of monthly premiums can also be prohibitively expensive.

“For a brand new home, the premium is about $1.25 per thousand,” Plooy said. And for older homes, an additional 25 percent surcharge. “Which is sizeable. But it’s just one of those factors that each individual has to weigh,” Plooy said.

But there are still more things to consider, including whether or not your insurer actually covers the area your home resides in, or if it even provides earthquake coverage at all.

Plooy says Anchorage and the Mat-Su fall under what he calls “Zone 1,” meaning there are certain areas and structures State Farm will not insure, depending on the soil, slope, or type of structure.

Plooy has advice for future homeowners.

“Beware of where you buy. Also the type of construction,” Plooy said. “Frame construction is the best and cheapest to insure, whereas masonry and others, it gets more and more expensive.”

He says there is some hope yet for those without earthquake coverage — that the federal government could step in, providing low-cost loans or other financial resources for people to rebuild.

But first, the Alaska Department of Homeland Security and Emergency Management has some tallying of its own to do before determining whether or not federal intervention is needed.

“Right now, we are implementing the State Individual Disaster Assistance program and working with local government, FEMA, and the Small Business Administration to conduct a Preliminary Damage Assessment,” Alaska Department of Homeland Security and Emergency Management spokesperson Jeremy Zidek said in a statement.

Zidek says the information gathered by the Preliminary Damage Assessment will be used to determine the state’s request for federal assistance.

The deadline to apply for State Individual Disaster Assistance is January 29, 2019. You can submit an application for assistance at the Division of Homeland Security & Emergency Management website.

Qassataq's friends and family are hosting a fundraiser at Alaska Pacific University this Sunday from 4:30 - 9 p.m. to help offset the cost of her deductible.



 
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