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29th February 2008

Does my home insurance cover earthquake damage?

Thousands of people were awoken just before 1am on Wednesday the 27th February by an earthquake. Many hundreds of homes, cars and business were damaged leaving a huge payout bill for insurance companies.

Insurance companies are preparing for a deluge of claims after the biggest earthquake to hit the UK. Insurers estimate that the damage caused, may mean paying out “tens of millions of pounds.”

The Association of British Insurers based its assessment on the claims made after a smaller earthquake in Folkestone, Kent, in April 2007.

Malcom Tarling The Association of British Insurers (ABI) spokesperson said, “The epicentre may have been in Lincolnshire but the effects were felt across the country, and so damage will be widely dispersed rather than confined to just a few streets.”

Homeowners checking their insurance policies may be in for shock when reading the small print. Which states exclusions for an “act of God”, which would constitute and earthquake. However the ABI say that the term is widely misunderstood, and that they will be covered by their policies.

An act of God is only used in a legal defence if someone is suing you for negligence but the event was beyond your control.

Malcom Tarling explains that if your neighbour only has third party motor insurance and a brick from your chimney smashed their windscreen in the earthquake, they could not claim the cost from you unless your chimney sways in every small gust of wind – the damage occurred as a result of a situation beyond your control.

However, fully comprehensive motor insurance will cover you for damage to your car in the event of an earthquake.

Direct Line urges customers to check for damage immediately and to take photographic or video evidence of the damage to building and contents.

Experts said that the earthquake posed more of a geological mystery as to the possible causes that include a re-awakened ancient fault zone, the accumulating mud beneath the North Sea and the aftermath of the last Ice Age.

Source:

Guardian
Yorkshire Evening Post