The catastrophic destruction potential of earthquakes makes them intriguing and mysterious, especially since we have no real way of predicting when they will occur. Beyond the major ones that receive international attention, many small, undocumented earthquakes go unreported and cause problems for homeowners and renters across the United States.
There have been more than 50,000 earthquakes in the last 365 days, according to Earthquake Tracking, so when it comes to protecting your home and personal property from earthquakes, you want to be adequately covered against loss, no matter the force on the earthquake. richter scale.
We’re here to answer your most important earthquake insurance questions. here’s what we’ll cover:
what is earthquake insurance? Does homeowners or renters insurance cover earthquakes? What does earthquake insurance cover? earthquakes and deductibles how much does earthquake insurance cost? Do I need earthquake insurance? Is earthquake insurance worth it? Where can I buy earthquake insurance?
what is earthquake insurance?
earthquake insurance reimburses you for earthquake damage, from damage to your home and personal property, to temporary living arrangements. It’s available in most states as an add-on to your homeowners insurance policy, or you can buy it from a provider that specializes in selling earthquake coverage. Geography 101: An earthquake is an intense shaking of the Earth’s surface, caused by fractures in the ground, also known as fault lines, that can be devastating to a home’s structure and extended property. 148 million Americans are at risk of damage from earthquakes, and fault lines aren’t the only cause of earthquakes: Fracking and mining also cause earthquakes in parts of Oklahoma, for example.
The potential cost of earthquake-related damage has risen steadily as buildings age and more urban development emerges in areas that are at high risk of earthquakes.
Does homeowners and renters insurance cover earthquakes?
not. Homeowners and renters insurance policies do not cover earthquake damage, so if you live in a high-risk area, you may need to purchase a separate policy, along with your basic homeowners or tenants.
Some homeowners insurance policies might cover damage from fire after an earthquake, which is a common aftermath of an earthquake.
what does earthquake insurance cover?
If an earthquake occurs, your policy will cover:
1. Homeowners Coverage: If you own a home, this covers damage to your home and extended structures, like a garage or swimming pool.
2. personal property coverage: reimbursement for the replacement cost of your damaged property.
3. loss of use coverage: any additional expenses you may need, like a hotel, takeout, and parking if you can’t stay in your home.
FYI, your earthquake insurance policy will not cover damage due to:
- vehicle damage
- zip code
- household age
- distance to fault lines
- the material your house is made of
- how much would it cost to rebuild your house
earthquake insurance and deductibles
Quick summary: An insurance deductible is the amount of money you choose when purchasing a policy that will be subtracted from future claim payments.
When it comes to earthquake insurance, deductibles tend to be high, between 15 and 20 percent of your home’s coverage limit. Cities built closer to or over active fault lines will have higher deductibles, so you’ll end up paying more out of pocket if you file an insurance claim.
So, let’s say your homeowners coverage is $200,000 and you have a 20 percent deductible. If you file a $200,000 claim for damage to your home, you are responsible for paying $40,000 before your insurance kicks in.
How much does earthquake insurance cost?
The average cost of earthquake insurance in the United States is $800 per year. Keep in mind that insuring a single-family home in California can cost more, between $1,248 and $2,744 a year for $500,000 of coverage.
However, the exact price of an earthquake insurance policy will depend on your coverage limits, deductibles, and several other factors, including:
by the way, california residents can use the california earthquake authority’s (cea) premium calculator to get an estimate of how much earthquake insurance will cost.
Do I need earthquake insurance?
it depends. Earthquake insurance isn’t required, but depending on where you live, your home could be at risk of irreparable damage. California law requires homeowners insurance companies to offer additional earthquake coverage, but there is no law that requires anyone to purchase a policy.
Only 13 percent of Californians buy earthquake insurance because people don’t think it will happen to them, according to California Earthquake Authority CEO Glenn Pomeroy. They also mistakenly believe that their homeowners or renters insurance policy will cover them for earthquake damage.
While people tend to think that only the state of California is at high risk, there are actually 42 other states that are also at risk for earthquakes, 16 of which have a recorded magnitude of six or more earthquakes on the Richter scale.
If you don’t have the money set aside to rebuild your home, repurchase your personal belongings, and pay for temporary living costs, you should definitely consider purchasing an earthquake insurance policy. don’t forget that budget would be above the ongoing costs to pay off your mortgage, even if your house has been completely destroyed.
FYI: If an earthquake just hit your area, insurers typically won’t sell new policies for a couple of months.
Is earthquake insurance worth it?
Some argue that high deductibles and premiums make earthquake insurance expensive and therefore not worth it.
To determine if an earthquake insurance policy is worth it to you, start by establishing the potential risk where you live. Use this map from the United States Geological Survey to estimate the probability of an earthquake in your area (you may be surprised to find that you’re closer to a fault line than you thought).
The further away you are from a fault line, the cheaper the policy, so you may decide it’s worth buying a policy for around $25 a month for peace of mind.
where can i buy earthquake insurance?
Dozens of insurers offer earthquake insurance as a supplement to their standard homeowners policies. If you’re interested in adding coverage to your policy, ask your insurance company if they offer earthquake insurance in your state and how much it will add to your monthly premiums.
At Lemonade, we offer earthquake insurance for our California homeowners insurance policyholders through our partners, Palomar, for just a few extra dollars a month. This add-on extends the coverage of your things for any physical damage caused by an earthquake.
It is worth noting that a base policy lemonade already covers direct losses caused by fire, explosion or theft as a result of earthquakes.
don’t put yourself at risk
Banks require homeowners to purchase flood insurance if they live in flood zones, but the same is not true for earthquake insurance. Because of this, homeowners often leave their homes without a contingency plan.
If you live on a fault line or near areas that experience fracking, it pays to purchase earthquake insurance and of course always carry a renters or homeowners insurance policy.
Which states currently offer homeowners insurance?
arizona, california, colorado, connecticut, georgia, illinois, indiana, iowa, maryland, massachusetts, michigan, missouri, nevada, new jersey, new york, ohio, oklahoma, oregon, pennsylvania, tennessee, texas, virginia, washington , cc (not a state…yet), and wisconsin.