On Friday, January 25th, an earthquake measuring 4.8 on the Richter scale occurred in the east Texas town of Timpson. Timpson is about 172 miles south east of Dallas. The earthquake occurred at 1:01 a.m. and was felt in east Texas, southwest Arkansas and western Louisiana. No injuries or damage were reported.
Waiting in my email in box were announcements by several carriers that moratoriums were in effect for counties located within a 100 mile radius from the quake’s epicenter. Having a moratorium go into effect simply means;
- An insurance company will not write a policy for a new home, renters or condo insurance in that area for a set number of days (in this case, 7 to15 days).
- If an aftershock exceeds 4.0 on the Richter scale the moratorium starts over.
- Existing policy holders are not permitted to add earthquake coverage until the moratorium ends.
Moratoriums can interrupt a new home purchase or changes in coverage during a renewal period. The reason is to make sure the home, condo or apartment was not damaged. Once the moratorium has expired, new business can be written until the next interruption.
Moratoriums go into effect for a number of reasons. In Texas most moratoriums go into effect for either;
- Wild fire
In these two cases, the progress of the hurricane or wild fire is tracked. As landfall locations are determined or a fire’s path is determined, counties impacted by the hurricane or fires will cease writing property insurance for a period of a week or two. Prior to Galveston being struck by Hurricane Ike, insurance companies implemented moratoriums about 3 days prior to landfall for renters, condo, home and even new auto policies.
The reason behind the moratoriums is keep people from taking advantage of the system either by adding a coverage they may have previously not carried or increasing coverage to take advantage of a storm. Texas law clearly states that no insured can make a profit off of a claim.
It is an inconvenience to delay moving into a new apartment or rental home, let alone closing on a new house or condo. But it does beat moving into a damaged home. The points I would encourage anyone to understand are;
- Now is the time (before hurricane season) to review coverage amounts.
- If a change in coverage is needed, take care of it.
- If you live near the coast and are not in a flood zone, price and consider flood insurance now. There’s a 30 day waiting period for a new policy to go into effect.
- Earthquake coverage is not included in your home policy but is available as an option through either your carrier or a third party carrier. (we have access to both).
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