Earthquake insurance helps property owners recover from losses due to earthquake damage. This coverage provides essential financial protection for condominium owners in California, Alaska, and other areas prone to seismic activity.1
Without earthquake insurance, condo owners may face hefty out-of-pocket expenses for repairs and rebuilding since standard homeowners insurance policies typically exclude coverage for earthquake damage.
Here’s what you need to know about condo earthquake insurance.
Condo earthquake insurance is a special policy that covers damage to your condominium unit caused by an earthquake. It can help pay to repair, rebuild, and replace personal belongings after a seismic event.2
Like standard condominium insurance, a condo earthquake policy covers damage to your unit as defined by the condominium owner’s association (COA) governing documents. For example, your COA might cover everything outside your unit, including the roof, windows, and common areas.3
But a standard condo policy (HO-6) excludes coverage for “earth movement,” which is the insurance industry’s term for earthquakes. Buying a separate condo earthquake policy in addition to your standard condo insurance addresses the unique risks associated with earthquakes.
Condo earthquake insurance provides several essential coverages for property damage and other expenses you might face after an earthquake.
Structural damage: The policy covers repairs to the structural components of your condo unit based on your COA’s governing documents. For example, it can cover damage to internal fixtures like plumbing, electrical systems, and built-in appliances if you’re responsible for them. The association’s master policy should cover the building’s exterior and common areas, while your policy protects your unit.
Personal property: Earthquake insurance also extends to your personal belongings within the unit, including furniture, electronics, clothing, and other personal items that an earthquake might damage or destroy.
Additional living expenses: If earthquake damage makes your condo uninhabitable, this coverage pays the cost of living elsewhere during the repair process.
Additional assessments: If an earthquake damages the condo building and common areas, your condo association may require unit owners to share repair costs or pay part of the association’s insurance deductible through an assessment. Some condo earthquake policies provide coverage for the policyholder’s share of the assessment, although you may have to pay an additional premium.
Condo earthquake policies don’t cover damage from events unrelated to earthquakes, like floods, fires, other natural disasters, or vandalism. They also don’t cover pre-existing damage. This means if your condo had structural problems before the earthquake, the insurance company won’t cover those repairs.4
Earthquake insurance also typically excludes costs associated with bringing your property up to current building codes during reconstruction unless you purchase add-on coverage for building code upgrades.
Here are a few tips for choosing the right condo earthquake insurance for your needs:
Assess your risk. Start by evaluating whether earthquakes are a risk in your area. You can look up your address using the U.S. Seismic Design Maps or research local earthquake history to understand the likelihood of an earthquake causing damage to your unit and contents. If you live in a low-risk area, the cost of earthquake coverage might outweigh the potential benefits.
Consider your coverage needs. Review your condominium association agreement to determine where your responsibility ends and the association’s begins. You should also consider the value of your personal property. This will help you choose the right coverage limits for structural damage and your personal belongings.
Compare policies. Get quotes from multiple insurance companies and compare coverage options, limits, deductibles, and premiums.
Understand the policy terms. Pay attention to specific terms and conditions, as they vary from policy to policy. Make sure you understand what your policy does and doesn’t cover to avoid surprises later.
Check the company’s financial stability and reputation. Research the insurance company’s financial strength with AM Best and read customer reviews on sites like Trustpilot. Reliable insurance companies with good track records of customer satisfaction are more likely to provide dependable support when you need to file a claim.
According to an Insurance Information Institute survey from 2020, only 23% of homeowners with insurance have earthquake coverage, often because it’s prohibitively expensive in areas with the highest risk.5 The following factors influence the cost and coverage of condo earthquake insurance.
Areas with high seismic activity, such as places near fault lines or with a history of frequent earthquakes, typically have higher premiums.
Buildings constructed with earthquake-resistant materials and designs, like reinforced concrete or steel frames, generally qualify for lower rates. Older buildings with less resistant construction are more susceptible to damage, which increases the cost of insurance.
Older homes may have outdated construction methods and materials, making them more vulnerable to earthquake damage. But if you maintain your condo well — or if you recently renovated it to meet modern building codes — you may earn lower costs due to a reduced risk of severe damage.
Your deductible is the amount you pay out of pocket before your insurance coverage kicks in after a claim. Deductibles on earthquake policies are usually a percentage — 10% or 20% of the coverage limit — rather than a flat dollar amount. Choosing a higher deductible can lower your premiums, but it means you’ll bear more of the cost in the event of a claim.
Here are five ways to reduce the cost of your earthquake insurance:
Retrofit the building. Encourage your condo association to invest in retrofitting the building to meet modern seismic standards. This might include reinforcing the structure by adding shear walls or bolting the building to its foundation.
Bundle policies. Try bundling earthquake coverage with other policies, like your homeowners or auto insurance. Many insurance companies offer discounts when you buy more than one policy from them.
Choose a higher deductible. Opt for a higher deductible to lower your premium. Just make sure you can afford to cover the deductible if you need to file a claim.
Shop around. Compare quotes from multiple insurers. Different companies offer different rates and discounts, so it pays to shop around.
Maintain good credit. In some states, insurance companies can consider credit history when determining insurance premiums. People with good credit tend to file fewer claims, so maintaining good credit can help lower your insurance costs.
If you need to file an earthquake claim, follow these steps for a smooth process.
The following information can help answer your remaining questions about finding affordable condo earthquake insurance.
In the United States, the average cost of earthquake insurance ranges anywhere between $800 and $5,000 per year. But rates vary depending on location, building structure, building age, and the amount of coverage you need. You may pay more if you live in a high-risk area.
California residents can get a more accurate premium estimate using the California Earthquake Authority (CEA) Premium Calculator.
If you live in an earthquake-prone area, getting earthquake insurance on your condo protects you financially if an earthquake damages or destroys your unit and personal belongings. Standard condo insurance and renters insurance policies don’t cover earthquake damage, so you need to get an earthquake endorsement or buy a separate earthquake policy.
If a major earthquake destroys your condo, earthquake insurance helps cover the cost of rebuilding or repairing your unit, replacing your personal belongings, and providing temporary housing during the restoration process.
No. Federal and state law don’t require condo earthquake insurance. But experts recommend it for condos in high-risk areas because it protects against heavy financial losses if an earthquake damages or destroys your condo and belongings.
)
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
NPN: 20564519
Featured in
){kind=small}
){kind=small}
)
)