Natural hazards and home insurance in Alaska

Which hazards affect Alaska homes?

The Municipality of Anchorage’s All Hazards Mitigation Plan says the city is vulnerable to earthquakes, avalanches, landslides, wildfires and ground failures, among other hazards. We only describe the hazards that official sources document for Anchorage, the state’s largest city; other parts of Alaska face different risks, and you should ask the local government.

Earthquakes

The U.S. Geological Survey lists the 1964 Prince William Sound earthquake at magnitude 9.2. The Municipality’s plan calls the March 27, 1964 Good Friday earthquake the largest ever recorded in North America, notes that shaking lasted four to five minutes, and says the Turnagain Heights landslide destroyed more than 100 homes. The USGS also lists a magnitude 7.1 earthquake on November 30, 2018, 1 km southeast of Point MacKenzie. The plan places it near Anchorage at a depth of about 40 km.

Floods

The Municipality says streams, rivers, lakes and coastal areas are susceptible to flooding. It counts close to 10,000 acres of floodplain and more than 3,500 parcels partly or entirely inside it. It names rainfall runoff and snowmelt from the Chugach Mountains as contributors. For details by parcel, see buying a home in Anchorage.

Landslides

The Division of Insurance treats a landslide as an “earth movement” event. A standard homeowners policy “will most likely exclude coverage,” and the guide adds that landslide damage is not covered when the slide is caused by rain, snow, flooding or earthquakes.

What standard homeowners insurance covers

Source: Alaska Division of Insurance, Consumer Guide to Homeowners Insurance and “Earthquake Insurance and You”; FEMA FloodSmart.

Earthquake insurance: what to know

The Division of Insurance’s brochure states that most residential property policies do not cover earthquake damage and that a separate policy is one way to protect your home. The Division describes earthquake cover as follows:

• What it pays. Repairs for shaking and cracking, other structures such as a garage, personal property, land stabilization, debris removal and additional living expenses.
• Limit. The earthquake coverage amount matches your dwelling coverage. Insuring only to the appraised or loan value may not be enough to rebuild.
• Deductible. Separate from your regular deductible. The 2021 guide says it is usually 10% of the dwelling coverage; the brochure says it may be 10% to 20% of the coverage limit.
• Aftershocks. A common definition of an earthquake includes aftershocks for up to 72 hours. Check your policy.
• Conditions. Some companies require, for example, a secured water heater.

A worked example

Take a home insured for $430,000. With a 10% earthquake deductible, you would absorb the first $43,000 of covered earthquake damage yourself. At 20%, it would be $86,000. This is an illustration; your policy sets the actual figure. We do not give a typical premium: no official source we read states one, and prices vary by insurer and home.

Flood insurance through the NFIP

FEMA’s FloodSmart site says most homeowners insurance does not cover flood and that only flood insurance meets mortgage and federal disaster assistance requirements.

• Amounts. NFIP building policies cover up to $250,000, and contents policies up to $100,000. They are usually bought separately and have separate deductibles.
• Rates. Three things set the rate: where the property is, how it is built and what it would cost to replace. Rates do not vary by insurance provider.
• When it is required. If you own a home in a Special Flood Hazard Area and have a government-backed mortgage, you must have flood insurance. Some lenders require it elsewhere. The Municipality of Anchorage states the requirement affects nearly all mortgages from commercial lenders.
• Availability. The Municipality of Anchorage participates in the NFIP, so policies are available for all structures there, whether or not they are in the floodplain.
• Property history. If a property has received federal disaster assistance, flood insurance is required to get it again. The requirement follows the property, not the owner.

For the general rules, see our guides to flood insurance and homeowners insurance.

Questions to ask before you buy

1. Is the home in a Special Flood Hazard Area? Ask your lender, and check the Municipality’s flood maps if you are in Anchorage.
2. Is the insured value enough to rebuild, not just to repay the loan?
3. What is the earthquake deductible in dollars?
4. What did the seller disclose? See seller disclosure in Alaska.

The Division of Insurance’s Consumer Services office takes questions at (907) 269-7900 or (800) 467-8725 (in state).