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Guide to Earthquake Insurance

Amy Danise

On the surface, earthquake insurance could make sense: If a quake knocks down your house and destroys your belongings, you want insurance, right? But when you start looking at the exclusions and limits on coverage, earthquake insurance might not seem like a surefire win.

Is earthquake damage covered by insurance?

Homeowners insurance does not generally cover earthquake damage, so you’ll need a separate earthquake insurance policy.

What’s typically covered by earthquake insurance:

  • The dwelling (house).
  • Other structures.
  • Personal property.
  • Loss of use, meaning extra expenses you have if you can’t live at home due to an earthquake.
  • Debris removal of damaged property.
  • Costs to bring the property up to code during reconstruction.
  • Loss assessments you have to pay due to an earthquake, such as a loss assessment against members of a homeowners association.

Make sure you’re aware of the policy’s payment limits for each. For example, the maximum coverage for a dwelling might be lower than the actual cost to rebuild the house.

What’s usually not covered by earthquake insurance:

  • Lawns, plants, trees and shrubs.
  • The value of the land.
  • Structures used for business or rented out to other people.
  • Underground structures such as pipes, cables and drains.
  • Awnings and satellite dishes.
  • Coin and stamp collections.
  • Loss of market value to your house due to the earthquake.
  • Animals, birds and fish.
  • Motor vehicles and boats/watercraft.
  • Things outside such as playground equipment, gazebos and equipment sheds.
  • Property that wasn’t maintained in good or working condition.
  • Property that didn’t belong to you.

Check the policy for special limits on certain items so you’re not caught by surprise if you have an earthquake claim. Things that might have limited coverage include:

  • Swimming pools, spas, hot tubs and fish ponds.
  • Chimney repair.
  • Driveways and sidewalks.
  • Fences.
  • Retaining walls.
  • Possessions such as computer equipment, jewelry, silverware, crystal, china, fine art, sports equipment, guns and more.
  • Structural engineering costs you have in order to determine if you can live in the house, but not including those provided by public entities like a local government.

Special policies for Californians

Earthquake insurance in California is usually purchased through the California Earthquake Authority, which has its own coverage rules.

Tips for buying earthquake insurance

  • Look at the big picture for the limits for your dwelling (house), contents (possessions) and loss of use (additional living expenses if you can’t live at home due to quake damage). In EverQuote’s review of different earthquake policies we saw policies that limited dwelling coverage to $25,000, contents coverage to $5,000 and loss of use to $1,500. That won’t go very far.
  • Check deductibles and calculate the dollar amount you’d have to personally absorb if you had a claim.
  • Watch for coverage limits on specific items. For example, if you have a swimming pool, note which policies exclude pools and what the limit is with other policies. If you have a chimney, note the limits on chimney repair.

Some earthquake insurance policies list related problems that will mean you aren’t covered if they happen at the same time as the earthquake, or right before or after the earthquake. These could include:

  • Fire. Although homeowners insurance typically covers fire damage.
  • Other earth movement. This can include landslides, mudflows, sinkholes and volcanic eruptions.
  • Water damage such as a tidal wave or tsunami.
  • An explosion. But explosions are typically covered under a home insurance policy.
  • Your own failure to try to save property at the time of the quake, which the policy might refer to as “neglect.”
  • War, nuclear hazard or pollution.

What do you have to do right after an earthquake?

An earthquake insurance policy might specify what you have to do right after an earthquake in order to make a claim. It might require you to:

  • Notify your insurer right away.
  • Protect the property from further damage.
  • Save all damaged property. Don’t start putting things on the curb for the trash collector!
  • Keep a good record of repair expenses.
  • Provide an inventory of all damaged property, including bills and receipts that show values.
  • Provide receipts for all additional living expenses, such as hotel and restaurant bills (for a “loss of use” claim).
  • Provide documents the insurer requests, which could include banking and financial documents.
  • Even testify under oath about your claim.

How much does earthquake insurance cost?

Here are typical factors and discounts used to calculate rates:

  • The location of the house, including the intensity of shaking expected at the location. The Modified Mercalli Intensity Scale defines levels of shaking.
  • Age of the house: Older homes will generally cost more to insure.
  • Number of stories: Single-story houses tend to be the cheaper for earthquake insurance; split levels can be the most expensive.
  • The grade, or slope, under the house.
  • Foundation type. For example, an insurance filing from GeoVera shows a post-and-pier or stilt construction to be more expensive to insure than a concrete slab foundation.
  • Whether you’ve retrofitted the house to withstand against earthquakes better.
  • Whether the water heater is braced with metal straps.

In California, the average premium is $674 for a policy through the California Earthquake Authority.

Earthquake insurance deductibles

A deductible is the amount subtracted from an insurance claims check. Earthquake deductibles are usually 5% to 15% of the policy’s limit. So even a 5% deductible on a house insured for $300,000 comes in at $15,000.