Earthquake Coverage
Earthquakes can strike at any time and cause massive amounts of property damage. Often, earthquakes trigger landslides, flooding, fire and explosions. Most homeowners cannot afford the cost to repair or rebuild following a devastating earthquake. Earthquake insurance can help keep you financially stable in the event of a catastrophic loss.
FAQs
What does an earthquake policy cover?
Many people assume that their homeowners or renters policies cover earthquakes. In fact, the opposite is true. The vast majority of homeowners’ policies specifically exclude earthquake losses. Earthquake insurance can include coverage of the following:
- Damage to your dwelling
- Damage to your personal property
- Loss of use
- Building code upgrades
The term “earthquake” is typically defined as a “sudden trembling or shaking of the earth” and usually includes incidents caused by volcanic eruption. Coverage for earthquakes is available as a standalone policy.
What doesn’t earthquake insurance cover?
It is important to remember that insurance doesn’t cover everything. Earthquake coverage usually excludes the following from coverage:
- Fires that occur after an earthquake would likely be covered by a homeowners policy
- Man-made earthquakes are usually the result of fracking and are excluded
- Water damage (including flooding) that occurs after an earthquake could be covered by homeowners insurance
- Vehicles damaged during an earthquake might be covered by your personal auto policy
- Explosions that occur after a seismic event are often covered by homeowners insurance
How does an earthquake deductible work?
Like other types of insurance, earthquake insurance usually has a deductible. A deductible is the amount you are responsible for paying after a covered loss before your insurance coverage kicks in. Most earthquake policies have a percentage, rather than a dollar amount, deductible. Areas that are more prone to earthquake losses will often have higher deductibles than those that have a lesser risk. Earthquake deductibles can range anywhere from 2% to 20% of the total replacement cost of the home. High deductibles are often used by consumers as a way to help offset earthquake coverage premiums.
Example: You have an earthquake policy for your home in Colorado. An earthquake occurs and you suffer a loss. Your building has a replacement cost of $300,000 and you have a 3% earthquake deductible. This means you have a $9,000 deductible on your earthquake policy.
Do I need earthquake coverage?
Millions of Americans are exposed to earthquakes and most don’t even realize it. Eighty-five percent of states have some exposure to earthquakes. Fault lines run all over the country, making earthquakes a widespread peril. In fact, every state in the U.S. has some seismic activity. Some states, like California and Alaska, are more at risk than other states due to geological conditions. Many people believe that the federal government will step in and cover all disaster recovery after an earthquake. However, that type of total assistance will likely not be available.
When should I purchase earthquake coverage?
Insurance carriers usually stop selling earthquake insurance right after an earthquake hits. This period is known as a moratorium and can last several months after an earthquake event. It is important to obtain earthquake coverage before an earthquake happens to ensure you have protection when you need it most.
How much does earthquake insurance cost?
The cost of earthquake coverage is based on a variety of factors. One of the biggest factors is the location of your home. You should expect your earthquake policy premium to reflect the risk of an earthquake in your area. In particular, earthquake premiums in the Western United States are much higher than those in the Eastern United States. Other items that affect pricing include: the age of your home, distance to a fault, the home’s construction materials, soil conditions, the value of the home and the type of foundation your home has.