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Property & Casualty Insurance/General Insurance coverage in event of a Earthquake.


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Can Apartment / Bungalow property owners claim their Insurance on occurrence of earthquake ?.

Do General Insurance policies provided by Public or Private limited cos cover insurance coverage for natural disaster such as Earthquake ?.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

ANSWER: Prashant,

Thank you for your question.  I apologize for the delay.  I've been traveling quite a bit over the last couple weeks so I've fallen a bit behind.

Earth movement, which includes earthquake, is typically excluded by almost all property policies.  Perils such as earthquake, flood, or sinkholes are usually fairly localized and unpredictable and are not suited to traditional insurance coverage forms.  These perils are usually insured through a governmental body or residual market.  In California, for example, there is the Earthquake Authority.  

Some states have a much lower exposure to earthquake, like South Carolina.  Many companies offer earthquake coverage via an endorsement and charge an additional premium for the coverage.  As you can see, it will vary based on where the property is located.

Other natural disasters are not so difficult to insure.  Perils like windstorm (including tornadoes, hurricanes, hail storms, etc.) are readily insurable, although in some areas (like the Atlantic and Gulf coasts) separate deductibles may apply.

I hope that answers your question.  If you have additional questions please don't hesitate to ask.  

---------- FOLLOW-UP ----------


Thank you.

The "Property Protection from Earthquake" Non Life Insurance becomes an interesting product.

Example :

A Property (Flat in a building, Apartment, Bunglow) is worth INR 80 lacs (current market value) and contents within the property is INR 10 lacs. Policy commencement Date : June, 2013.

A "Property Protection from Earthquake" Non Life Insurance Policy is purchased from the company/corporation (insurer) which will cover the property structure and contents protection in event of a earthquake.

The insured is paying Rs 5 lacs premium yearly. Now Earthquake happens in June 2018 i.e. after five years. The property market value in June 2018 is INR 1 crore, 30 lacs.

The insurer while processing the claim for his property and contents in June 2018 will receive

INR 1 crore, 40 lacs (1 Crore, 30 lacs + 10 lacs)


INR 90 lacs (80 + 10) ? from the insuring company.

Note : INR = Indian Rupees currency.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

Hey Prashant,

I'm having a hard time following because of the currency.  That said, most property policies in the US are written on a replacement cost basis...there is no depreciation because of age.  The personal property can also be written on a replacement cost basis for an additional premium.  Also...since the cost to rebuild the property goes up with inflation, the policy can contain a clause that automatically increases the values to keep pace with inflation.  

If I'm understanding your example correctly, you are trying to show that the cost over 5 years is not worth what the coverage would pay 5 years down the road.  That could be true if the policy is written on an Actual Cash Value (ACV) basis, however, as the coverage is reduced each year, the premium will also decrease.  

Based on the above assumptions, the insured would always be better off carrying coverage.  However...if, after 5 years, an earthquake had not occurred then the insured would have been much better off not purchasing coverage.  Unfortunately, that's the nature of risk.  The cost of transferring the risk to the company via an insurance policy is what drives the decision to retain it or transfer it.  

It's much easier to make the correct decision when you look back.  Unfortunately, we don't have the luxury of looking back.  We can only look ahead into the future and weigh the options.  Transferring the risk can give us peace of mind...but that peace of mind comes with a price...the premium of the insurance policy.  

I hope that makes sense.  Let me know if I'm not understanding what you're asking.  If you can convert the above into US dollars that might help be answer it better.

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Jay K. Williams, AAI, AIP, CIC, CRM


I can answer questions relating to the following coverages: personal auto; homeowners; commercial auto; commercial liability; commercial property; business income and all other property and casualty coverages.


I have been in the insurance industry in Florida since 1979. I am currently the president of a Florida domestic insurance company subsidiary. I've taught continuing education classes in Florida and across the country. I am quite familiar with all coverages including Florida Condominium master policies and unit owner policies. I also specialize in agent professional liability. I have been a professional educator since 2001.

I am a member of the Florida Associaion of Insurance Agents, the state affiliate of the Independent Insurance Agents and Brokers of America.

I currently carry the following professional designations: Accredited Advisor in Insurance (AAI) Associate in Insurance Production (AIP) Certified Insurance Counselor (CIC) Certified Risk Manager (CRM)

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