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Nearly 75% of the United States could be vulnerable to earthquake damage, according to the most recent report from the U.S. Geological Survey (USGS). And yet, standard homeowners, renters, and condominium insurance policies usually don’t cover the types of property loss caused by seismic shaking.
To get real protection, you generally have to purchase separate earthquake insurance, or get earthquake coverage added to your existing policy for an additional premium. Otherwise, if you suffer a loss, you can expect to manage any repair and replacement costs on your own, which could delay the recovery process and result in significant financial hardship.
Is your property at risk? Read on for a look at what earthquake insurance covers, what it can cost, and who might want to consider purchasing an earthquake insurance policy.
Key Points
• Most standard homeowners and renters insurance policies do not cover damage caused by earthquakes.
• Insurers may offer earthquake coverage as a standalone policy or as an add-on to a standard homeowners policy.
• Earthquake deductibles are typically larger than homeowners insurance deductibles. A larger deductible can lower your premium, but you’ll pay more out of pocket if you suffer a loss.
• Comparing insurers’ quotes online can help you find an earthquake policy that fits your needs and budget.
What Does Earthquake Insurance Cover?
Earthquake insurance can help you rebuild your home if it’s destroyed, replace items you lost, and even help with some temporary living expenses if you can’t use your home. Coverage may vary from one carrier to the next, though, so it’s a good idea to read through your agreement to understand what you are and aren’t getting. Your coverage could be based on the type of home you have, for example, or on rules specific to your area.
Here’s a quick look at what a typical policy might cover.
• Dwelling: This coverage includes your home and qualifying attached structures (like an attached garage or porch).
• Unattached Structures: This could include a detached garage or carport, or a storage shed.
• Personal Property: Your policy may help you replace clothing, furniture, dishes, and other personal items. (There may be a limit on certain items, including computers or tools.)
• Living Expenses: If you can’t live in your home because of covered damage, your insurer may reimburse you for meals, lodging, laundry, and other expenses.
Recommended: What Does Homeowners Insurance Cover?
Does Homeowners Insurance Cover Earthquakes?
Homeowners insurance policies generally exclude damage from land movement or landslides. You may be able to purchase an endorsement or rider through your insurer that provides earthquake coverage, but if so, it will come with an added cost and a separate deductible. Or you may choose to purchase a separate earthquake home insurance policy.
To be clear: Homeowners insurance policies typically include something called “hazard insurance” that protects the home and its surrounding structures. And your mortgage lender may require that you carry this type of coverage. But this is not earthquake insurance.
Does Renters Insurance Cover Earthquakes?
Don’t assume property that’s lost in or damaged by an earthquake will be covered through your basic renters policy — most insurers exclude this type of protection so typically renters insurance does not cover earthquakes. Unless the earthquake causes a fire or explosion, your loss probably won’t be reimbursed. If you live in an earthquake-prone area, you may be offered earthquake coverage as an add-on to your renters insurance, but it will likely be at an extra cost. Or you may choose to purchase separate earthquake insurance for renters.
Recommended: How to Buy Homeowners Insurance
Earthquake Insurance Deductibles and Limits
Most earthquake insurance policies have a deductible — just like your car or homeowners insurance. This is the amount the policyholder is responsible for paying on each claim.
Earthquake deductibles are typically larger than homeowners insurance deductibles, and they could be anywhere from 2% to 20% of the coverage limit. So if your home is insured for $300,000, for example, and your deductible is 10%, you can expect to pay $30,000 toward your losses before the policy kicks in. (Your policy may have separate deductibles for your home, outside structures, and belongings, just like most homeowners policies do.)
A larger deductible can help lower the cost of your premium, but if you suffer a loss, you’ll have to pay more out of your own pocket.
Your insurance company can help you figure out how much coverage makes sense based on your home’s value, the cost to rebuild, and your personal property coverage requirements.
How Much Does Earthquake Insurance Cost?
The average cost of earthquake insurance is about $800 a year. But several factors can influence how much you’ll ultimately end up paying, including the value of your home, the coverage limits and deductible you choose, the age and location of your home, what the home is made of (wood vs. brick, for example), and the foundation type.
If you live in a region that’s known for seismic activity, such as California, Washington, Oregon, or Alaska, your premiums could be much higher. In low-risk states like Florida, New York, and Texas, on the other hand, premiums are typically significantly lower.
Remember as you consider your budget that this cost will be in addition to how much your homeowners insurance is.
Recommended: What Does Flood Insurance Cover?
Who Should Get Earthquake Insurance?
Unless you live in a state that’s at a higher risk for earthquake damage, it’s possible you’ve never even thought about purchasing earthquake insurance. (Most people don’t: Even in California, which experiences 90% of the earthquakes in the U.S., only 10% of residents have earthquake coverage, according to the Federal Emergency Management Agency (FEMA).)
But some areas of the U.S. that you might not expect, including Hawaii, Tennessee, and Missouri, are also at moderate-to-high risk.
If you’re deciding whether or not to get earthquake insurance, it may be helpful to:
• Check out hazard maps at the FEMA or USGS website to assess the risk in your location. You can also visit your state’s Department of Insurance website to get more localized information.
• Determine the current value of your home and think about how much it could cost to cover your losses yourself if you have to repair, rebuild, or replace your property.
• Get a quote to get a better idea of what earthquake coverage would cost you, and run the numbers to see if the potential for damage justifies the cost of this kind of coverage.
• Keep in mind that your standard homeowners policy won’t cover losses attributed to earthquake damage. In California, insurers must offer coverage (at a separate cost) to homeowners every two years, but purchasing it is optional. Residents are not legally required to carry earthquake insurance — and most don’t.
Recommended: Is Homeowners Insurance Required to Buy a Home?
How to Get an Earthquake Insurance Quote
As you calculate how much protection you need and weigh the cost of getting insurance vs. the risk of forgoing coverage, the idea of shopping for earthquake home insurance may feel overwhelming. But getting quotes from several insurers can be quick and convenient if you start your search online — especially if you can get multiple earthquake insurance quotes on one site.
• Do some comparison shopping. Make sure you’re getting the right coverage from a reputable insurer at the best possible price.
• Check coverage details. Be ready to provide information about your home and/or property, including potential replacement costs. Keep your needs and priorities in mind as you assess coverage options. (It may help to review a homeowners insurance glossary to learn some basic terms.)
• Review deductible options. Higher deductibles can lower premiums, but you’ll pay more out of pocket if you file a claim. Run the numbers to find the right balance.
• Talk to an insurance agent. If you have a relationship with an insurance agent or broker, you could also ask for their recommendations regarding coverage needs, costs, and companies to consider.
The Takeaway
Having the right type and amount of renters or homeowners insurance can help ensure you’re protected if a loss occurs. A standard homeowners or renters policy can cover a multitude of mishaps.
If you want earthquake coverage, however, you’ll likely have to get a separate policy or have coverage added to your basic homeowners or renters policy. If you live in an area that’s known for seismic activity — or if you aren’t sure of your risk — you may want to check out the different types of coverage that are available.
If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.
SoFi brings you real rates, with no bait and switch.
FAQ
Is earthquake insurance worth it?
It depends on your risk and your resources. If your home was affected by seismic activity, could you afford to rebuild, repair, or replace your property without separate earthquake insurance? Keep in mind that your homeowners or renters policy generally won’t cover earthquake damage, and the federal government’s ability to offer assistance may be limited. Earthquake insurance isn’t required, and it can be expensive. But you may find it’s worth the cost if it lowers your exposure to financial risk.
Can I add earthquake insurance to my existing homeowners policy?
Homeowners insurance typically doesn’t include earthquake coverage. But your insurer may offer separate earthquake policies or an earthquake endorsement you can add to your policy for an added premium. You can also shop online for coverage that suits your needs.
What is not covered by earthquake insurance?
It’s a good idea to review your policy carefully to understand what it covers. Earthquake policies typically don’t cover hazards that other types of insurance may cover — such as fire damage (homeowners insurance), vehicle damage (auto insurance), flooding (flood insurance), and sinkholes (sinkhole coverage). Other items that aren’t generally covered include exterior masonry veneer, satellite dishes, awnings or patio coverings, landscaping, and some decorative items.
How is an earthquake insurance deductible calculated?
Earthquake deductibles typically range from 2% to 20% of the coverage limit. So, for example, if a home that’s insured for $300,000 has a 10% deductible, the homeowner can expect to pay $30,000 toward property losses before the earthquake coverage kicks in. A policy may have separate deductibles for your home, outside structures, and belongings.
What states require earthquake insurance?
Earthquake insurance – even earthquake insurance for renters – isn’t mandatory in any state. In California, which is a high-risk state, insurers are required to offer earthquake insurance as an option, but homeowners are not required to purchase it.
Photo credit: iStock/SUNG YOON JO
Home and Renters Insurance: Insurance not available in all states.
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