If you think that your homeowners insurance covers everything that could happen to your house, you could be wrong. Most homeowners insurance policies cover things like theft and vandalism, as well as damage from extreme weather like hail, fire, and lightning. Certain natural events, like earthquakes, are not considered “covered perils” and earthquake damage is excluded from most policies.
Homeowners who live near seismic activity should talk to their insurance agent about a separate earthquake policy. But is earthquake insurance worth it? To find out if it’s right for you, consider the likelihood of an earthquake impacting your home and compare the cost of premiums with the out-of-pocket expense of rebuilding/repairing your home in the event of a quake.
What does earthquake insurance cover?
Earthquake insurance protects against damage caused by movement within the earth’s crust or volcanic action that leads to violent shaking of the ground. According to the National Association of Insurance Commissioners, earthquake insurance typically covers:
- Repair/rebuild costs for your main dwelling and possibly other structures, like a garage.
- Loss of use if your house is uninhabitable during repairs.
- Debris removal from your property.
- Personal property like furniture, electronics, and other belongings within your house.
- Emergency repairs immediately following an earthquake, typically for safety reasons.
- Building upgrades to meet current building codes and make your home more earthquake-proof.
Like all insurance policies, there are some types of damage excluded from earthquake insurance. Earthquake insurance generally won’t cover perils covered by other insurance, like your homeowners, auto, or flood insurance. Common exclusions from earthquake insurance include:
- Fire: Earthquakes can start fires by rupturing gas lines. Fire damage should be covered by your homeowners insurance.
- Water: Broken water pipes are covered by homeowners insurance, while sewer backups or floods from nearby bodies of water requires separate flood insurance.
- Land: Cracks and sinkholes caused by earthquakes require separate sinkhole insurance.
- Vehicles: Any damage to vehicles on your property during an earthquake will be covered by your comprehensive auto insurance.
- Appliances and systems: Refrigerators, dishwashers, and your home’s security system could all be exempt from your earthquake insurance. These may be covered by either your home warranty or your homeowners insurance (or possibly, both).
Should I buy earthquake insurance?
Like any insurance policy, the decision to get earthquake insurance should be based on a risk-benefit analysis: comparing the cost of premiums to the potential benefits in the aftermath of a damaging quake.
First, assess the likelihood of a seismic event hitting your home. Is your home located on a fault line, or have there been recent tremors in the area? You can check the online fault map on the United States Geological Survey’s website. Their website also has information on recent seismic events throughout the United States.
Next, consider the costs of cleaning up and rebuilding in the aftermath of a quake. Could you cover those costs yourself? Without earthquake insurance, you would have to pay all replacement costs out-of-pocket. Not just the cost to rebuild your home, but probably also to replace damaged personal property, like furniture and clothes. Compare this to the total cost of premiums for earthquake insurance in your area.
In addition to premiums, consider your insurance deductible. Deductibles for earthquake insurance are typically higher than for other kinds of insurance, ranging from 5% to 15% of your home’s insured value. That means if your home is insured for $200,000, and requires $50,000 worth of repairs, you’d still have to pay a deductible of $10,000 to $30,000 before insurance would kick in and cover the rest.
If you’re having difficulty deciding if earthquake insurance is worth it in your circumstances, talk to your insurance agent about the actual likelihood that you’d need it.
How much does earthquake insurance cost?
In most states, the average annual cost for earthquake insurance is $100 to $300, which could be as little as $8 per month. However, the cost for earthquake insurance will increase the higher the chances of an earthquake happening near where you live. Residents along the west coast, or close to active faults, may have premiums approaching $800 per year.
Factors that affect your earthquake insurance premiums include:
- your home’s proximity to a fault line
- previous homeowners insurance claims on the property, particularly for seismic activity
- the amount of coverage you want
- your deductible – a higher deductible means lower monthly premiums
How do I get earthquake insurance?
There are two main ways to get earthquake insurance: as an add-on to your homeowners insurance company or as a standalone policy.
Homeowners insurance companies may provide an optional endorsement to add to your primary insurance policy. Adding a rider to your main policy can be cheaper than buying a standalone policy, but this depends upon your circumstances and may not be an option with your homeowners insurance provider. A standalone policy can be purchased from the California Earthquake Authority or other insurance companies, such as Farmers or Allstate. Contact your state’s Department of Insurance, for insurance provider options where you live. While they could be more expensive, you’d have more control over your deductible limits and ultimately save money by spreading those limits between policies.
Contributions from Dena Landon