Even a small earthquake can cause significant damage to your home and belongings, but a standard homeowners insurance policy doesn’t cover earthquake damage.1 So if you live in an area where earthquakes are common, you should probably consider earthquake insurance.
California experiences 90% of the country’s earthquakes, yet only 10% of residents have earthquake insurance, according to the Federal Emergency Management Agency. Understanding how earthquake insurance works and where to purchase it will help you determine whether this coverage is right for you.
What is earthquake insurance?
Earthquake insurance provides coverage for your home and belongings if they’re damaged in an earthquake. Depending on your policy, it may also pay for additional living expenses while your home is being repaired.
Hazard insurance, a standard part of homeowners policies, doesn’t cover earthquakes. However, if an earthquake causes a fire that damages your home, homeowners insurance will cover that.3
What earthquake insurance covers
Californians are at an increased risk for experiencing damaging earthquakes, according to the United States Geological Survey’s hazard model. If you’re on the fence about purchasing earthquake coverage, it can help to look at the main components of your policy.
What doesn’t earthquake insurance cover?
Earthquake insurance doesn’t pay for everything. Here are some commonly excluded items:
Fire: Earthquake insurance won’t pay for damages caused by a fire since this is something your homeowners insurance policy covers.
Land: Earthquake insurance won’t pay for damages to your land, like sinkholes, but you may be able to buy additional coverage to restore your land.
Vehicles: You’ll have to check your auto insurance policy to see if it covers damage to your vehicles from earthquakes.
Water damage: Earthquake insurance won’t cover water damage caused by flooding, sewer or drainage backup, a tsunami, or other natural disasters.
What to know about California earthquake insurance
Despite how common earthquakes are, state law doesn’t require California residents to purchase earthquake insurance. However, if you have homeowners insurance in California, your insurer must offer to sell you earthquake insurance every other year.
The California Earthquake Authority (CEA) provides most earthquake insurance policies. The CEA is a not-for-profit organization and one of the world’s largest providers of residential earthquake insurance. You’ll purchase a policy from an insurance company that’s a member of the CEA.
Is California earthquake insurance worth it?
Earthquakes can happen anywhere in the United States, but California is especially vulnerable. Anyone living in the Bay Area, Central Coast, Central Valley, the Sierra Mountains, or Southern California is at the highest risk of experiencing an earthquake. And most Californians live within 30 miles of an active fault line, according to the California Earthquake Authority.
Even a minor earthquake can cause major damage to your home and belongings, and without earthquake insurance, you’re responsible for covering 100% of these costs. So if you live anywhere in the Golden State, you should consider purchasing earthquake insurance.
Some people are hesitant to purchase earthquake insurance because it can get expensive, especially if you live in a high-risk area. A variety of factors determine your premiums, including your home’s age, proximity to a fault line, and foundation type.
Earthquake insurance for renters
It’s not just homeowners who need earthquake insurance — renters can also benefit from this coverage. Like homeowners insurance, a standard renters insurance policy won’t pay for damages caused by an earthquake. In addition, your landlord’s policy will only cover the structure of the building and won’t pay to replace your belongings.
Earthquake insurance for renters covers your belongings and additional living costs if your home is damaged or destroyed in an earthquake. As such, you should consider whether you have the funds to replace your belongings or pay for temporary housing after an earthquake.
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