An earthquake is devasting, especially in states that are prone to having them. Sadly, earthquake insurance is not easy to come by. If you are shopping for coverage, begin with your current homeowners or renters’ insurance company.
Most insurance companies do not pay for damages as a result of earthquakes. Not many standard homeowners policies offer earthquake insurance as an add-on. Some insurance companies offer it as a separate policy. California is susceptible to earthquakes making obtaining earthquake insurance even more important. This article provides a guide to California earthquake insurance.
Who Needs Earthquake Insurance?
Earthquake insurance is not for everyone. Truthfully, earthquakes can happen in all 50 states, but some states are more prone than others. In such states, earthquake insurance becomes a must-have. For instance, residents in the Western states are aware of earthquake risks, and they know the importance of earthquake insurance. Oklahoma, in particular, is known primarily as a tornado hotbed recording the most earthquakes in the U.S. in 2015. However, in other regions, tremor quivers may come as a surprise. Regardless, see the U.S. Geological Survey to track your state’s tremor timeline. Because of the reality of earthquakes and the devastation it leaves, earthquake insurance is imperative. The damage can be overwhelming, and you probably can’t afford to rebuild your home and replace all your belongings out of pocket.
Where to Buy Earthquake Insurance
If you need earthquake insurance, enquire from your current homeowners or renters insurance company. Ask if it offers earthquake insurance as either an addon to your policy or a separate policy. The California state law requires home insurance companies to also provide earthquake coverage. Residents of the United States’ most populous state can also buy coverage through the California Earthquake Authority. Residents of California, Oregon, and Washington can buy earthquake policies from GeoVera or Arrowhead. Arrowhead is an agency that sells policies from multiple companies.
In the meantime, residents in other regions can shop around if their current insurer doesn’t offer earthquake coverage. However, your homeowners or renters insurance company can still help and direct you to companies that offer the coverage. Find your state’s Department of Insurance website as a useful resource for finding licensed earthquake insurers, both big and small. Importantly, it is characteristic of insurers not to sell new policies for one or two months if an earthquake just occurred in your area.
What is Inside an Earthquake Insurance Policy?
The following are the typical coverage included in earthquake insurance:
- Repairs to your house and also attached structures like a garage.
- Your personal belongings, such as furniture and clothes.
- Additional expenses, such as hotel bills if you can’t live in your home.
The following are what earthquake insurance does not pay for:
- Fires caused by an earthquake. That’s already covered under your homeowners insurance.
- Vehicle damage. Comprehensive auto insurance covers that.
- You’ll need separate flood insurance, as the flood is a by-product of an earthquake.
- Some states also require insurers to offer sinkhole insurance, or you can typically add it to your homeowners insurance or buy separate coverage.
- Masonry used for your home’s veneer.
Depending on your policy, coverage for other structures, such as a carport or tool shed, and debris removal may also come standard. You may also have optional coverage like building code upgrades, land restoration, and emergency repairs.
How Much Coverage Do You Need?
Your insurer will set the same limits on dwelling coverage for both earthquake and home insurance if you are a homeowner. However, you don't need to worry about adding dwelling coverage if you are a renter. Your personal property coverage limit may initially be set on the lower side, around 10% of your dwelling coverage, but you can raise this to your insurer’s maximum. Also, there may be caps on how much your insurer will pay for any one item.
Earthquake Insurance Deductibles
Earthquake policies have a steep deductible, which is the amount subtracted from your claim payment between 10% to 20% of your dwelling coverage limit. Some insurance companies use separate deductibles for each part of the policy - dwelling and personal property. It’s crucial to ask your potential insurers if they have an overall deductible or separate ones. If you choose your deductible as low as you can, it will enable you to get the most out of your policy, although your rates will be higher.
How Earthquake Insurance Rates Are Determined
Rates for earthquake insurance depends on your coverage limits, deductible, and other factors such as your ZIP code, the age of your property, the number of stories, your home's rebuilding cost, the soil type, the building materials used in your home, and your area’s proximity to fault lines and seismic activity.
According to NerdWallet's sampling of earthquake insurance rates from the California Earthquake Authority, a renter may pay less than $300 a year for $50,000 in personal property coverage with a 5% deductible and $1,500 for loss of use. Always review your policy with your insurer and see where rates can be adjusted.
The devastation of an earthquake can leave you with high out-of-pocket expenses. Earthquake insurance is important. It is essential to ensure that you are covered, and your property is protected in the event of an earthquake. Are you looking to buy earthquake insurance in Ventura, CA? Contact the experts at
John E. Peakes Insurance Agency today. Our dedicated team is eager to assist you with all your insurance needs today.
