Associations containing multi-story buildings are natural candidates for coverage, and contributing factors - such as tunnels and storm drain systems located beneath buildings - need to be discussed with the association's insurance broker to address realistic scenarios.
Federal disaster assistance (usually in the form of loans or grants) is only available if the damage is widespread, very serious, and the area must be declared a disaster zone by FEMA (Federal Emergency Management Agency).Standard insurance policies do not generally cover damage directly caused by earthquakes. You can often obtain earthquake coverage by adding an endorsement to the Association’s policy. The Association also has the option of exploring a stand-alone policy, dedicated specifically to an earthquake event. As with any type of insurance, associations need to check with their insurance agents to ensure that the coverage realistically meets their exposures.
It’s important to know how “earthquake” is being defined to ensure proper coverage. Although one insurance company may define “earthquake” as an occurrence being caused by seismic activity, often earthquakes or earth movement definitions exclude similar events such:
- Any earthquake or volcanic eruption that begins before the inception of the insurance;
- Earth movement (other than coverage provided by this optional coverage), such as landslide, or earth sinking, rising or shifting;
- Fire, explosion (other than volcanic explosion), tidal wave, tsunami, flood, surface water, water which backs up or overflows from a sewer, drain or sump, water below the surface of the ground (including that which flows, leaks or seeps on or into covered property), mudslide or mudflow, release of water impounded by a dam, even if attributable to an earthquake or volcanic eruption.
The Association should review earthquake coverage with its insurance agent when determining an acceptable level of risk and weigh the costs to obtain the additional coverage.
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