"It's Not an Earthquake Safe Zone"... Make Sure to Get 'Earthquake Insurance'

Earthquake Endorsement Enrollment Rate Only 3.3% in Fire Insurance
Compensation for Fire, Collapse, and Damage Caused by Earthquakes

Recently, a moderate earthquake (magnitude 4.8) occurred in Buan, Jeonbuk, increasing interest in earthquake damage insurance coverage.

According to the Financial Supervisory Service on the 25th, although many domestic non-life insurance companies sell earthquake damage coverage products, the subscription rate remains low due to insufficient guidance. The subscription rate for special earthquake risk clauses in fire insurance contracts was around 3.3% as of 2022. Last year, the subscription rates for wind and flood disaster and earthquake insurance were 33% for houses, 18% for greenhouses, and 23% for small business stores and factories.

When subscribing to wind and flood disaster and earthquake disaster insurance, which is specialized for natural disasters, property damage caused by earthquakes to houses, greenhouses, and small business stores and factories can be compensated. Wind and flood disaster and earthquake disaster insurance is a policy-type insurance where the national and local governments subsidize part of the premium (55?100%). It is sold by seven non-life insurers including Samsung, DB, Hyundai, KB, Meritz, Hanwha, and NH Nonghyup. Subscriptions are possible by visiting branches or via phone, internet, or mobile.

Choi Eung-cheon, head of the National Heritage Administration, visited Naesosa Temple in Buan, Jeonbuk, which was damaged by an earthquake on the 12th, to inspect the condition of the fallen fence stones.
[Image source=Yonhap News]

By adding a special earthquake risk clause when subscribing to fire insurance, additional compensation for earthquake damage can be received. The standard fire insurance contracts for houses, general buildings, and factories typically cover damage caused by fire (including lightning). However, if the special earthquake risk clause is added, damage caused by fire, collapse, or breakage due to an earthquake can also be compensated. If the existing fire insurance does not include the earthquake special clause, the possibility of mid-term subscription to the earthquake clause varies by insurance company, so inquiries should be made to the respective insurer. Currently, 14 non-life insurers handle the special earthquake risk clause.

Even if subscribing to two or more earthquake damage insurance products, actual loss compensation is provided, so it is necessary to check for duplicate subscriptions. When subscribing to two or more earthquake damage insurance products covering the same risk, proportional compensation is made within the range of the actual loss amount. Therefore, the necessity of additional subscription, such as increasing the compensation limit, should be fully considered before deciding.

In case of bodily injury caused by an earthquake, it is necessary to check the subscription status of life insurance, third-party insurance, or local government citizen safety insurance. If bodily injury (death, permanent disability, etc.) caused by an earthquake falls under the insurance payment reasons of life or third-party insurance subscribed by the individual, compensation can be received. For the stabilization and support of citizens affected by unexpected disasters, local governments autonomously subscribe to citizen safety insurance (group insurance), which also covers death and permanent disability caused by earthquakes, so it is necessary to verify this.

It should be noted that there are damages not covered even by earthquake damage insurance products. Damages caused by earthquakes already in progress at the time of the insurance contract or loss and theft of the insured property are not compensated.

For businesses or factories, earthquake damage coverage is possible through comprehensive property insurance. Comprehensive property insurance covers various risks that may occur in factories, commercial facilities, hospitals, etc., under a single policy. It can compensate for fire, lightning, wind and flood disasters, mechanical breakdown, business interruption, liability, as well as earthquake damage for businesses and factories.