All About: Earthquake Insurance For Your Home
Earthquake insurance pays cash when your home or property is damaged by an earthquake. Earthquake insurance is required because earthquakes are not covered by most standard homeowners insurance and renters insurance policies. Earthquakes strike everywhere in the U.S. — not just in California.
What is Earthquake Insurance?
Earthquake insurance is an insurance policy which pays cash when an earthquake damages home or property.
Earthquake insurance is available to homeowners and renters, and pays for:
- Repairs to a home that has been damaged in an earthquake
- Replacements for personal property that has been damaged in an earthquake
- Costs for a hotel room when an earthquake has left a home uninhabitable
Earthquakes are not covered by homeowners and renters insurance policies; nor are they included as part of your auto insurance coverage.
For protection from the effects of an earthquake, a separate earthquake insurance policy is needed.
As an example of how earthquake insurance works: when an earthquake hits and causes your garage to collapse on top of your car, it’s your car insurance policy that pays to replace your automobile. The cost of rebuilding your garage, however, is paid using cash from your earthquake insurance.
Earthquake insurance also pays cash to fix your home and its garages and sheds; to replace damaged appliances and ruined clothes; and, to put you in a hotel while your home gets repaired.
Earthquake insurance is optional. You aren’t required to use it. However, coverage should be considered by all homeowners and renters in states which are at-risk for an earthquake.
States Where Earthquakes Are Likely
These 16 states are most likely to be affected by earthquakes
|States With Highest Risk For Earthquake|
Homeowners in adjacent states should consider earthquake insurance coverage, too.
Oklahoma, as one example, is not listed as an at-risk state. There have been years in which more earthquakes hit the Sooner State than California; including a massive earthquake that hit earlier this decade.
The majority of the United States is at risk for an earthquake, in fact. And, in low-probability areas, earthquake insurance can be cheap.
Homeowners and renters can bundle earthquake insurance with other insurance coverages such as homeowners, condo or automobile insurance to get a multi-line discount; and, to make sure they’re protected.
Coverage can cost as little as $50 per year.
What Does Earthquake Insurance Cover?
Earthquake insurance protects homeowners and renters from loss in three distinct areas.
The first area of protection earthquake insurance provides is protection for your home.
Specifically, earthquake insurance pays cash when an earthquake damages your home’s structure. This can include damage to your home’s roof, garage, foundation, and walls.
It can also include the costs of hauling debris from your property; of bringing your home up to code with today’s building standards; and, of stabilizing the ground beneath your home.
Your homeowners or renters insurance won’t pay for structural damage from an earthquake.
The second area of protection earthquake insurance provides is protection for personal property that’s damaged in an earthquake.
If you are a collector of rare dolls, as an example, and an earthquake causes a wall in your home to collapse which, in turn, damages your dolls, you can file an insurance claim to have the value of your dolls paid out as cash.
You can also make an insurance claim if an earthquake causes your furniture to get smashed; your clothes to get ruined; or, your artwork to be damaged.
Earthquake Insurance Quotes Available
Lastly, earthquake insurance pays for hotel rooms or temporary housing when an earthquake damages your home so badly that it can’t be lived in.
This additional living expense benefit pays for all of the basic elements required to run your household, including moving and storage costs; furniture rentals for your home; and, in some cases, meals at restaurants.
The worse your home is damaged by an earthquake, the longer you can receive living expense benefits from your insurer. For catastrophic damage, an earthquake insurer may provide living expense benefits until you’ve found a new, permanent home.
4 Questions to Help You Shop for Earthquake Insurance
Every earthquake insurance policy is unique. Pricing is based on the size of your home and its address; and, the amount of stuff you want to insure.
It’s smart to shop around when you’re looking for an earthquake insurance policy. Where you find the cheapest earthquake insurance will depend on what you want your insurance to cover.
Here are four questions to help you get the most affordable earthquake insurance you can.
1. If an earthquake strikes your home, how much damage could you repair using your personal bank account?
When earthquakes hit, they can be costly. A collapsed garage can crush a car. A cracked foundation can require immediate repairs.
A person who makes an insurance claim after an earthquake, though, won’t get all the money that’s requested. Instead, the insurance company pays the money requested, minus the size of that person’s deductible.
A deductible is the amount of cash an insurance company withholds from an insurance claim. It’s the insured person’s out-of-pocket expense when something goes wrong.
When you sign up for earthquake insurance, you can choose the size of your deductible.
Earthquake insurance deductibles are different from deductibles used for homeowners insurance, renters insurance, and auto insurance, which are fixed dollar amounts. With earthquake insurance, deductibles are percentages. They’re a percentage of your total available coverage.
For example, if your car insurance offers $25,000 in comprehensive coverage, which protects against random events which damage your car, your 10% earthquake insurance deductible would be $2,500.
The larger your earthquake insurance deductible, the less you’ll pay for earthquake insurance.
If you have more than ten thousand dollars available in an emergency fund, you could probably handle a deductible of fifteen or twenty percent, which will lower the cost of your insurance.
Otherwise, opt for a smaller deductible of 10 percent. You’ll pay more for earthquake insurance with a ten percent deductible, but you’ll get more cash when an earthquake affects your life.
2. Are you willing to risk NOT having earthquake insurance?
Forty-two states have a measurable risk for earthquakes nationwide, with 16 states considered “high risk”. High risk states are those which have experienced a major earthquake in recent years.
When an earthquake hits, the damage can be huge. Roofs can collapse, walls can crumble, and cars can be crushed. And, none of this damage is covered by homeowners insurance or auto insurance.
The costs of your repairs will come from your bank account. Plus, you’ll still be responsible for paying your mortgage while you rebuild your home.
Earthquake insurance is never required. But, unless you live in a state that’s at low-risk for an earthquake — and those states are North Dakota, Minnesota, Wisconsin, Missouri, and Florida — getting earthquake insurance can be smart, defensive move.
3. Would you move all of your insurance policies to one company in order to get a big discount?
You can get discounts on your insurance when you consolidate your coverages.
This is because insurance companies reduce rates for customers with two or more active insurance policies. It’s a pricing policy known as bundling.
When you bundle insurance, you can use your existing auto insurance policy to earn a discount on your earthquake insurance. The same is true for your homeowners insurance or your renters insurance.
It’s common to get discounts of 25 percent or more when you bundle but make sure check with multiple insurance companies. Different companies offer different-sized discounts for bundling.
4. Does your homeowners insurance already include coverage for earthquake damage?
Earthquake insurance is typically sold as an add-on to homeowners or renters insurance; or, to auto insurance. Earthquake insurance is separate coverage for protection against losses from an earthquake.
But, not always.
Insurance companies sometimes include earthquake coverage as part of their standard insurance coverage, which means that to buy an additional earthquake insurance policy would be redundant.
When your primary insurance policy names earthquakes as a covered peril, there’s no reason to carry additional earthquake insurance. Damage from an earthquake will be covered.
Shopping for Earthquake Insurance
Shopping for earthquake insurance is quick and simple. Talk to an insurance agent by phone, or shop for insurance rates online anytime.
Earthquake insurance rates will vary by company. Check with at least three insurers to make sure you’re getting a price you like — especially if you plan to bundle auto insurance, or homeowners or renters insurance with your policy.