East coast homeowners may have to pay for earthquake losses

Homeowners won’t be covered by standard property insurance policies if there’s any damage following today’s 5.8 magnitude earthquake centered near Richmond, Virginia.

Earthquake protection is generally excluded from standard homeowners’ insurance policies, and consumers have to purchase coverage either as a separate policy or an endorsement to an existing policy, said Michael Barry, a spokesman at the Insurance Information Institute in New York.

Most people who buy coverage live in quake-prone states, such as California, Washington and Missouri, according to Janece White, a vice president at Warren, New Jersey-based Chubb Corp., the insurer of commercial property and high-end homes.

“It’s very infrequent,” that residents who live on the East Coast purchase earthquake coverage since during their lifetimes there’s never been a temblor that warranted it, White said.

Source: BusinessWeek.com