It seems as if everyone’s been so caught up in hurricane madness over the last year, that we’ve sort of forgotten about another serious catastrophe: earthquakes.

That is, until last week when a 6.6 magnitude earthquake rattled Hawaii.

Robert Hartwig, the executive vice president and chief economist for the Insurance Information Institute (I.I.I.) said last week’s quake was “a reminder that disaster can strike anywhere at any time.”

Not to scare the bajeezus out of you, but it’s true. And fortunately there’s something you can do to protect yourself from earthquake damages.

Like flood insurance, earthquake insurance can be purchased in addition to your home insurance policy. As the name suggests, it covers damages to the structure of your home–and in most cases your belongings–resulting from an earthquake. And, like flood insurance, many homeowners don’t realize that earthquake-related damage is not covered by a standard home insurance policy.

And if you’re anything like me (a properly landlocked native of Iowa, living far, far away from seismic activity), you want to learn everything you can about earthquake coverage so that you can adequately protect yourself.

Let’s embark on this adventure of earthquake insurance edumacation together, shall we?

According to the I.I.I., earthquakes have occurred in 39 states since 1900, and have caused damage in all 50. (Interesting fact: the New Madrid earthquake of 1811 could be felt 1,000 miles away.)

And though about 5,000 quakes can be felt in the U.S. every year, a recent report by A.M. Best shows that 85 to 90 percent of people lack earthquake coverage. Which is pretty disconcerting when you consider that damages from the latest earthquake in Hawaii may top $100 million.

But unlike flood insurance (which is purchased through FEMA’s National Flood Insurance Program), earthquake insurance is purchased through private insurance companies, which means that policies are largely subject to individual state regulations. But there are some things you can count on, says the I.I.I., no matter where you live.

Policy coverage:

An earthquake insurance policy provides coverage against structural damage to your home or business, as well as damage to your personal belongings. It’s important to point out that fire and water damage (from bursting pipes, for example) occurring after an earthquake are covered by a standard home insurance policy. Damage to vehicles are covered by the comprehensive coverage in your auto insurance policy.

Deductibles:

Policy deductibles–the amount you pay out-of-pocket before the insurer starts paying–consist of a percentage rather than a dollar amount. Percentages range from 2 to 20 percent, and are based on the replacement cost of your home.

Thus, if the replacement cost for your home is $200,000 and your policy deductible was set at two percent, you would pay $2,000 if you had to file an earthquake-related claim.

Not surprisingly, riskier states will see higher deductibles. And, like other insurance policies, the higher your deductible, the lower your premium will be.

Premiums:

If you’re looking at purchasing property in an quake-prone area, keep in mind that older buildings will come with higher earthquake insurance premiums. That’s because older structures often buckle and collapse easier than newer structures.

Additionally, homes built with wood frames may receive discounts as they’ve been shown better withstand quakes better than homes made of other materials.

Of course, the very act of purchasing earthquake coverage is likely to save you a fair bit of coin in the long run, especially if you live in a high risk area. (I’m talking to you, California!)

Interested in learning more about earthquake coverage? Check out these handy links:

Earthquakes: Risk and Insurance Issues [I.I.I.]
Few Sign Up for Earthquake Coverage [Houston Chronicle Online]
The California Earthquake Authority (CEA)