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Are Earthquakes Covered by Homeowners Insurance?

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 | March 8, 2018
Does homeowners cover earthquake damage? We take a look.

Your homeowners insurance offers coverage to help protect your contents, liability and dwelling from many perils. Unfortunately for homeowners in the 42 states across the country that are vulnerable to earthquakes, your homeowners insurance does not cover earthquakes. Instead, you will need a separate earthquake insurance policy to help cover losses or damage due to an earthquake.

Though your homeowners insurance won’t cover earthquakes, a separate earthquake insurance policy will.

How to Get Earthquake Insurance

There are two options for securing earthquake coverage. You can either add on earthquake coverage as an endorsement to your existing homeowners insurance policy or you can get a separate earthquake insurance policy.

Speak with your insurance agent to determine which route is the best for you and your home. Keep in mind that your insurer may not offer endorsements for earthquake coverage, so you’ll have to get a separate policy.

Whatever routes are available to you, make sure to read through the coverage offered to you carefully. Be sure that you understand what exactly is covered and whether the coverage is adequate for your home and needs.

What Does Earthquake Insurance Cover?

Generally, earthquake insurance covers direct damages caused by earth movement. Some related damages, such as fires caused by earthquake, may be covered under your homeowners. Check the policy and confer with your insurance agent to make sure you understand what events your policy covers and if your homeowners insurance will kick in to fill coverage gaps.

It’s important to note that not all earthquake policies cover your personal belongings. If your personal property were destroyed during an earthquake, would you be able to replace your stuff? If the answer is no, look for a policy that includes this coverage.

How Much Does Earthquake Insurance Cost?

Like flood insurance, the cost of an earthquake insurance policy varies greatly depending on the location of the home. According to Bankrate, average rates in California are about $1.75 per $1,000 of coverage, while rates in other states can cost as little as 50 cents per $1,000.

One thing to consider when taking out an earthquake policy is the deductible. Earthquake insurance deductibles tend to differ from the deductibles of other policies, with the amount being a percentage of the limits, not a set amount. Depending on how much coverage you need, your deductible could get very expensive very quickly. Work with your insurance agent to make sure your policy will work on your budget.

Do You Need Earthquake Insurance?

Your need for earthquake insurance is highly dependent on where you live. Though the majority of states in the US are susceptible to earthquakes, many of those states are unlikely to see damage from the tremors that may strike. In some areas, however, damage from an earthquake could be devastating.

Do your research and speak with your insurance agent about risk in your area. Despite the high chance of a potentially large and devastating earthquake in the California area, only 11% of California homeowners had earthquake insurance in 2016, according to the California Insurance Department. Your insurance agent can help you assess your risk and the costs to rebuild as well as the costs of an earthquake insurance policy.

Sources:
https://www.iii.org/article/earthquake-insurance-for-homeowners
https://www.iii.org/article/background-on-earthquake-insurance-and-risk