When the 36-foot lava rock chimney on Theresa Wery’s historic inn collapsed during Hawaii’s earthquake, she thought her insurance would cover the damage.
But she and other property owners are quickly learning that insurance companies won’t pay out after an earthquake under most policies, and they’ll have to rely on scant government aid if they’re going to get any help at all.
“I’m devastated,” said Wery, whose Manoa Valley Inn suffered roof, structural, water and electrical damages when the three-story stack fell.
“The adjusters came to the house. They were quite cold,” she said. “They gave me a boilerplate pamphlet on what’s covered and what’s not. It kind of hurt a little bit.”
Residents and business owners aren’t covered for earthquake damage unless they pay extra, said Carolyn Fujioka, a Hawaii spokeswoman for State Farm Insurance.
Nationwide, only 10 percent to 15 percent of U.S. homeowners have earthquake insurance, according to insurance rating company A. M. Best Co. Inc.
The Hawaii state insurance office doesn’t keep records on how many policyholders have earthquake coverage, but businesses and residents in the state spent about $4.4 million on earthquake insurance in 2005 compared to about $250 million in total homeowners policies.
State Farm, the largest homeowners insurance policy company in the state, only covers 123 customers for earthquake damage out of 103,000 homes insured, Fujioka said.
Cost of adding earthquake protection varies widely by property and island but runs slightly less than hurricane insurance.
Some companies, including State Farm, don’t offer earthquake insurance on the Big Island because of the frequent seismic activity.
Common homeowners policies usually cover burst gas lines, water damage and fires triggered by earthquakes, but not damage from shaking.
The lack of earthquake coverage leaves victims waiting — and hoping — that federal or state government will come through with some financial help.
Government officials say they shouldn’t hold their breath.
People involved in disasters often hold misconceptions that the federal government will bail out victims who lost property, said James Shebl, a spokesman for the Federal Emergency Management Agency Region IX.
“It creates misunderstandings and sometimes hard feelings,” he said. “People don’t get everything they need. Our one-liner is, ‘It’s assistance to get back on your feet.'”
Preliminary damage estimates from the 6.7-magnitude quake off the coast of the Big Island reached $73 million, and President Bush declared a major disaster that will facilitate federal aid to help state and local recovery efforts.
Assistance to individuals was not immediately included in the declaration. Such grants historically average less than $3,000 for needs, including temporary housing, transportation and death benefits, Shebl said.
State damage assessment teams were surveying properties and adding up costs, said Ray Lovell, spokesman for Hawaii’s Civil Defense Agency. The state will then determine the amount of aid it can distribute based on how severe the damage is.
“A lot of what’s available will be determined by what these damage assessment teams find,” Lovell said. “There are a number of programs that may be available.”
Even property owners who did sign up for earthquake insurance may not get much coverage.
Policies typically come with a deductible of between 5 percent and 10 percent of a home’s value, meaning a homeowner with a $600,000 house could be responsible for paying the first $60,000 in damages, Fujioka said.
“If you’re willing to pay, you could get some kind of coverage, but it’s exceedingly rare,” said Judith Wong, a business professor at the University of Hawaii.
The state insurance commissioner’s office has received several phone calls from property owners seeking help, but those inquiries are usually directed to aid agencies like FEMA and the Red Cross, said Insurance Commissioner J.P. Schmidt.
“It’s a little bit early. It takes a little bit of time for people to evaluate the situation,” he said.
For now, people needing financial support for property damage may have little recourse, said Jeanne Salvatore, a spokeswoman for the Insurance Information Institute.
The best thing to do is keep accurate records of damage for the future weeks and months, when government assistance may eventually become available, she said.
“Sit down and document what your losses are, which means making lists and if possible taking pictures,” she said.
Government officials say they will publicize aid programs as they become available.
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