Glossary
Liquefaction, defined
A ground failure in which loose, water-saturated soil loses its strength during strong shaking and behaves briefly like a liquid. Buildings on it can sink, tilt or crack as the ground beneath them moves, even when the shaking alone would not have damaged them.
In practice
Earthquake underwriters map it because it turns a moderate quake into a foundation loss. River valleys, old lake beds, filled land and shallow groundwater are the ingredients, which describes much of the Salt Lake valley floor, parts of the Truckee Meadows around Reno, and pockets of the Boise area. A property in a mapped susceptibility zone may be quoted with a higher premium or a larger deductible, or declined by some carriers, while a house on bedrock a mile away is priced ordinarily. Standard home policies exclude earth movement of every kind, so the peril is covered only by a separate earthquake policy or endorsement, which in turn typically covers the building at replacement cost subject to a large percentage deductible. The analysis pulls the state geological survey's hazard map for the parcel and quotes accordingly.
A worked example
Suppose two identical houses sit a mile apart near a river. One is in a mapped high-susceptibility zone and is quoted $2,000 a year for earthquake coverage; the other, on firm ground, is quoted $900. Suppose a quake causes the first house to settle six inches on one corner, cracking the slab and walls, $90,000 of damage. The earthquake policy pays it less the deductible; the home policy would have paid nothing. Hypothetical figures.
Applies to: Earthquake Insurance