It is most important to know that a basic homeowners policy does not cover damage caused by earth movement. Even if you don't live in an area where earthquakes are common, it's possible you might need earthquake insurance.

Since the beginning of the 20th Century, earthquakes have occurred in 39 states. Approximately 90 percent of Americans live in areas considered seismically active. Even so, only a small percentage of people purchase earthquake insurance. Even in California, where earthquake fears are a daily fact of life, less than 15 percent of homeowners have earthquake insurance according to the California Earthquake Authority (CEA), down from 30 percent in 1996 when the state legislature created the California Earthquake Authority. Each year, more homeowners get rid of earthquake coverage than buy it because, according to consumer groups, the policies cost too much and cover too little.

Who buys earthquake insurance?

Based on a study by the U.S. Geological Survey, there is a 70 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike the San Francisco Bay area during the next 30 years. (A magnitude 6.7 earthquake is equivalent to the 1994 Northridge earthquake that killed 57 people and caused $20 billion worth of damage.)

Although earthquake insurance is sold to residents in all 50 states, Californians buy the most earthquake insurance.

The Earthquake Education Center at Charleston Southern University claims there's a 40 to 60 percent chance of a major earthquake somewhere in the eastern United States in the next 20 years.

That has prompted the South Carolina Insurance News Service to recommend residents of that state consider purchasing earthquake policies. "Most homeowners and rental insurance policies do not cover damage caused by an earthquake, but coverage can be added to most policies as an 'endorsement' for an additional premium," says Allison Dean Wright of the South Carolina Insurance News Service. "Earthquake insurance can be quite inexpensive. Contact your insurance agent or company to find out what the costs would be for your home."

The New Madrid Fault, which runs through Arkansas, Kentucky, Missouri, and Tennessee, also has insurers worried. According to the Insurance Information Institute, there's a 40 to 64 percent chance the region will suffer an earthquake with a 6.0 magnitude in the next 15 years. The availability of earthquake coverage has become an issue in some regions of those states. For those who don't remember, which would include anyone not alive in 1811 when it happened, an earthquake struck the New Madrid area with enough force to change the course of the Mississippi river and ring church bells on the east coast.

"The potential magnitude of a catastrophic New Madrid quake dictates that we approach the preparedness on a regional basis," said W.R. Padgett, board chairman of the Central United States Earthquake Consortium. "No one state can possibly begin to address all the issues."

What does earthquake insurance cover?

Ideally, your earthquake insurance policy should cover the cost to replace or repair your damaged property. There are several options to consider when picking a plan, including:

Does the policy cover only the dwelling? Are accessory structures, such as garages, also included?Will your policy pay for the contents of your home and for additional living expenses if your home is badly damaged or destroyed?Are there any exclusions or limitations to coverage?What deductible must you pay before the insurance kicks in? How much does earthquake insurance cost?

Earthquake insurance rates are determined differently by each insurance company and can vary widely depending on several factors. Generally, older homes cost more to insure. Wood homes get better rates than brick buildings, because wood tends to withstand quake stresses better. In addition, areas are graded on a scale of 1 to 5 for likelihood of quakes, and this might be reflected in earthquake insurance rates. Because earthquake insurance is a type of catastrophic coverage, most policies carry a high deductible - usually anywhere from 10 to 15 percent of your coverage limit.

For residents of California, one option is to get insurance through the California Earthquake Authority. The CEA coverage is offered only as a companion policy to customers who have their homeowners insurance with a partner carrier. The CEA is a state-sponsored private-public partnership providing earthquake insurance to California homeowners, renters, and condominium owners. Many insurance companies that belong to CEA offer a basic earthquake insurance policy, which has a 15 percent deductible. Californians can also buy earthquake policies outside the CEA. In California, there is a small handful of companies which offer Earthquake insurance on a stand alone basis.

How much earthquake insurance coverage should I buy?

If you ultimately decide to purchase earthquake insurance, remember you should buy enough to cover the costs of rebuilding your house and replacing broken possessions. The amount of insurance you buy should be based on replacement and reconstruction costs, not the market value of your property and possessions. You should also note that reconstruction costs are often elevated following a disaster due to the demand of construction services.

You should also find out your rights for filing claims before you sign any earthquake insurance policy. It's important to know how much time you have to file a claim following a quake. In some cases, damage from earthquakes is not immediately apparent.