Monthly Archives: February 2015

Earthquakes, Insurance and Preparedness

If you don’t already have earthquake insurance on your home, it may be time to take another look.  Since the Nisqually quake fourteen years ago in February 2001, scientists have been looking at the fault lines in Western Washington. Their conclusions suggest that the Olympic Peninsula could be a hot spot for seismic activity — and that it could be hit hard during the region’s next big earthquake.

While no one knows how to predict when an earthquake will occur, the geological evidence suggests they do happen with a periodicity. There are about 5,000 earthquakes a year in the United States, according to the Insurance Information Institute. We know that major quakes struck Pacific Northwest in about 1100 A.D. and 1700 A.D., so within a couple hundred years or so it looks like we may be due for another. And, since Mother Nature doesn’t seem prone to waiting on our convenience, it can come at any time. The Nisqually quake was costly; about $2 billion in damages. It was also a wake-up call and after that quake a lot of effort has gone into strengthening the public infrastructure around Puget Sound as well as efforts by private homeowners to make seismic readjustments. Most of our homes here are of wood construction so retrofitting for earthquake mitigation mainly involves tying houses tighter to their foundations, bracing chimneys, strapping hot water heaters and generally making certain that pictures or other household items that can either tip over or fall off the wall are secured. Retrofitting public buildings is a bit more difficult since many of our historic structures out here on the Peninsula are made of brick.

Every family ought to have an earthquake kit stocked and ready for any emergency. Kits can be purchased in many stores or online, or you can make up your own. The general recommendation is for a three-day supply of food and water for every member of the family – including food and water for pets – together with supplies like bandages, flashlights and other survival items. These items can all be packed together in a large plastic trashcan or other container and stowed in the garage or anyplace it can be conveniently retrieved later. There are plenty of good sources of suggestions for items to stow in an earthquake kit, like the one here.

We began this piece noting that if you don’t have earthquake insurance this anniversary month of the Nisqually quake might be a good time to consider looking into it. You probably already know – or should know – that your Washington homeowner’s insurance policy is not likely to cover damage in the event of an earthquake. You will need specific earthquake coverage to provide protection.  Earthquake insurance costs vary with location, the type of building and its age; older buildings and brick buildings cost more to insure.

Earthquake coverage also generally carries a higher deductible than homeowners insurance; in Washington and other western states deductibles may be 10% or more of the insured value; $25,000 or more on a $250,000 home.  As always, if you can tolerate a higher risk, you can often lower premiums by agreeing to a higher deductible.

If you are considering earthquake insurance – or trying to decide whether you may need it – contact us here at Homer Smith Insurance.   We can help.

Insuring Your Boat or Yacht

Do you own a boat or a yacht?  While there is no hard and fast definition, if you are 29 feet and under in a recreational vessel, you probably have a boat; if you are 30 feet and on up to the current record holder, the Eclipse at 536 feet and use it for recreation, congratulations on owning a yacht.  Either way, you probably have an insurance policy on your vessel – either mandated by the bank that finances it or by the commonsense knowledge that one at fault accident aboard your uninsured vessel could destroy your personal finances.

As the owner of a small vessel, your concerns center on having adequate liability coverage and having sufficient coverage to protect your financial investment. The most comprehensive policy is an “all risk” policy that provides coverage for most perils except those that are specifically excluded in the policy. You should also check to make sure you have a “stated value” policy rather than an “actual cash value” policy. While actual cash value may sound like a benefit, it refers to the depreciated value of your boat at the time of loss. You may not be able to recover enough from the depreciated value of your vessel to replace it. Be sure at the time you take out your policy to set the stated value at a high enough level to assure your ability to replace your boat.

Homeowners policies often include some coverage (e.g., $1,000) for damage to small boats while they are stored at your home. Don’t mistake this coverage for marine insurance; it does not cover your boat when it is afloat.

The insurance policy on a small vessel can be understood a lot like your Washington automobile policy. It will have provisions for liability coverage, damage to the vessel, uninsured boater’s coverage and coverage for contents such as personal effects or fishing equipment up to a stated policy limit. There are some unique aspects to small boat policies. For example you can obtain a policy that can suspend coverage during the time your vessel is not in the water and to insure boats while they are being trailered. You need to consider how your boat will be used, transported and stored and make certain that all your needs are covered.

If you own a yacht, you have a bigger vessel and more potential complications, but that’s something you probably already know. Larger vessels can go farther, stay out longer and potentially reach a broader range of environments. You will need both hull coverage and protection and indemnity (P&I) coverage on your vessel. There are implications for coverage contained in maritime law and, if your yacht is US built, you may be subject to Jones Act regulations if you have crew aboard. The best advice for yacht owners is to seek the assistance of a knowledgeable agent in planning coverage.

At Homer Smith Insurance we have years of experience serving the boating community and the expertise to give you sound advice on your insurance needs for a boat or yachtCall 888-433-0031 and talk with our marine insurance specialist, Jim Maupin, today!