Unlike flood insurance, earthquake coverage is available from most private insurance companies rather than from the government — except in California, where homeowners can also obtain coverage from the California Earthquake Authority (CEA). Commercial structures are not eligible for coverage from the CEA.
Earthquake insurance is expensive and in locations with high or severe exposure to loss by this peril, availability may be somewhat limited. This is true particularly in California and in states near the New Madrid Fault, which include parts of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee. In other areas of the country earthquake insurance is generally available but may not be considered necessary, which for some can be unfortunate. As pointed out in the accompanying sidebar, “More About Earthquakes,” in the past 100 years earthquakes have occurred in 39 states.
Earthquake damage is excluded in the standard homeowners and commercial property insurance policies of Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS). The following excerpt from the earth movement exclusion (with the concurrent causation language lead-in) is found in the ISO Basic, Broad, and Special Causes of Loss forms CP 10 10 06 07, CP 10 20 06 07, and CP 10 30 06 07 of the commercial property policy.
(4) Earth sinking (other than sinkhole collapse 2 ), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.
But if Earth Movement, as described in b. (1) through (4) above, results in fire or explosion, we will pay for the loss or damage caused by that fire or explosion.
The AAIS exclusion reads as follows: