Earthquake insurance protects your property and assets from damage caused by earthquakes. It’s different from regular homeowners or renters insurance. In California, only 10% of people have this insurance, even though they experience 90% of the country’s earthquakes.
This insurance covers direct damage from earthquakes. This includes damage to your home, personal belongings, and extra living costs.
The California Earthquake Authority (CEA) offers most earthquake insurance in California. They provide policies for homeowners, mobilehome owners, condo unit owners, and renters. The CEA covers your home up to the same limit as your homeowners insurance, but not for things like landscaping or pools.
Personal property coverage starts at $5,000 and can go up to $25,000. Coverage for extra living expenses ranges from $1,500 to $100,000. This coverage doesn’t have a deductible.
Key Takeaways
- Earthquake insurance is a specialized coverage that protects property and assets from seismic damage.
- Standard homeowners and renters insurance policies do not cover earthquake damage.
- The California Earthquake Authority (CEA) provides most earthquake insurance in California, offering policies for homeowners, mobilehome owners, condo unit owners, and renters.
- CEA covers dwelling coverage, personal property coverage, and additional living expenses in the event of an earthquake.
- Homeowners can purchase separate coverage for dwellings and personal property with different deductibles under the CEA Homeowners Choice policy.
Understanding Earthquake Insurance Basics
Many people think their homeowners insurance covers earthquake damage. But, this is not true. Earthquake insurance is a special policy that protects against earthquake damage.
The Difference Between Standard Homeowners and Earthquake Insurance
Standard homeowners policies only cover fire damage from earthquakes. This leaves most earthquake damage uncovered. Earthquake insurance, however, covers damage to your home, belongings, and living expenses if you can’t live there.
Key Components of Earthquake Coverage
- Dwelling coverage: Protects your home’s structure, like the foundation and roof.
- Personal property coverage: Covers your belongings, like furniture and electronics.
- Additional living expenses (ALE) or loss of use coverage: Helps with living costs while your home is fixed.
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Who Needs This Type of Insurance
Homeowners, renters, condo owners, and mobile home owners in earthquake areas should get earthquake insurance. It’s key for those near fault lines or in high-risk zones, like California. Even if you’re not in a known earthquake area, check your earthquake risk and consider this insurance.
“In the past 200 years, 37 out of 50 states in the United States have experienced an earthquake with a magnitude of 5.0 or higher.”
The risk of earthquakes is widespread, not just in obvious areas. This makes it vital to review your earthquake insurance needs, no matter where you live.
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What Earthquake Insurance Covers
Earthquake insurance is key for homeowners in quake-prone areas. It covers three main things: your home, your stuff, and living expenses if you can’t stay there.
Dwelling Coverage: This part protects your home’s structure, like the foundation and roof. It matches your standard homeowners insurance limit, giving your home full protection.
Personal Property Coverage: Your belongings, like furniture and clothes, are also covered. You can choose a coverage amount from $5,000 to $25,000, based on what you need.
Additional Living Expenses (ALE): If your home is not safe to live in, ALE helps with temporary living costs. You can get up to $100,000 for this, with no deductible in California.
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Some policies also offer building code upgrade coverage. This can give up to $30,000 to make your home meet current building codes after a quake.
| Coverage Type | Typical Limits |
|---|---|
| Dwelling Coverage | Same as Homeowners Policy Limit |
| Personal Property Coverage | $5,000 – $25,000 |
| Additional Living Expenses (ALE) | $1,500 – $100,000 (No Deductible) |
| Building Code Upgrade | Up to $30,000 |
Knowing what earthquake insurance covers helps homeowners prepare for a quake. It ensures they can recover and rebuild financially.
Coverage Exclusions and Limitations
Earthquake insurance offers valuable protection, but it has its limits. It doesn’t cover fire damage, which is usually handled by standard homeowners insurance. It also excludes land damage, like sinkholes, and damage to vehicles and floods, including tsunamis.
Features like pools, fences, and masonry work are often not covered. Separate buildings, like detached garages or sheds, might not be protected either. It’s key to carefully review your policy to know what’s covered and what’s not.
Understanding Policy Restrictions
Earthquake insurance policies have time limits. For example, you might have only 72 hours after a quake to file a claim. Knowing these deadlines is crucial to ensure you can use the coverage you’ve paid for.
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Special Considerations for Different Property Types
Condo owners face unique challenges with earthquake insurance. They might need to buy loss assessment coverage to help pay for repairs to common areas. Owners of older homes or homes with specific construction types might need extra coverage or retrofitting to get earthquake protection.
| Earthquake Insurance Coverage Exclusions | Potential Limitations |
|---|---|
| Fire damage | Time limits for filing claims (e.g., 72 hours) |
| Land damage (sinkholes) | Condo loss assessment coverage requirements |
| Vehicle damage | Retrofitting needs for older or specific construction types |
| Flood damage (including tsunamis) | |
| Landscaping, pools, fences, masonry | |
| Separate buildings |
Knowing the exclusions and limits of earthquake insurance helps homeowners make smart choices. It ensures they have the right coverage to protect their property and assets.
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Earthquake Insurance Deductibles and Costs
Earthquake insurance deductibles usually range from 10% to 20% of the coverage limit. For example, if your home is insured for $200,000, a 10% deductible means you’ll have to pay $20,000 before the insurance helps. This is much higher than the deductibles for standard homeowners insurance, which can be as low as $500 or $1,000.
The cost of earthquake insurance varies a lot. It depends on where your home is, how old it is, and how it’s built. It also depends on the coverage limits and deductible you choose. On average, people pay between $800 and $5,000 a year for earthquake insurance. In California, the average is $739 a year.
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Homeowners who have made their homes safer from earthquakes might get discounts. The California Earthquake Authority (CEA) offers deductibles of 5%, 10%, 15%, 20%, and 25%. Some homes, like high-value ones or older homes on raised foundations, might have different options. Choosing a higher deductible can lower your monthly payments but means you’ll have to pay more if an earthquake happens. It’s key to think about your finances and how likely you are to have an earthquake when picking your deductible and coverage.
FAQs
Q: Why do I need earthquake insurance?
A: You need earthquake insurance if you live near a fault line or in an area prone to seismic activity. Standard homeowners insurance policies typically do not cover earthquake damage, making it essential to have a separate policy to protect your property and belongings.
Q: What does earthquake insurance cover?
A: Earthquake insurance usually covers damage to your home and personal property caused by an earthquake. This includes repairs to the structure, replacement of damaged items, and additional living expenses if you need to relocate temporarily due to earthquake damage.
Q: How much earthquake insurance is worth getting?
A: The amount of earthquake insurance worth getting varies based on your home’s value and your risk assessment. It is advisable to consult with an insurance agent to determine the appropriate coverage amount to adequately protect your assets.
Q: What is the cost of earthquake insurance?
A: The cost of earthquake insurance can vary significantly based on factors such as your location, the value of your home, and the level of coverage you choose. On average, earthquake insurance premiums can range from a few hundred to several thousand dollars per year.
Q: Does homeowners insurance cover earthquake damage?
A: No, homeowners insurance does not cover earthquake damage. To protect against seismic risks, you must buy earthquake insurance as a separate policy or endorsement.
Q: What are earthquake deductibles?
A: Earthquake deductibles are the amount you must pay out of pocket before your earthquake insurance coverage kicks in. These deductibles are often higher than standard homeowners insurance deductibles and can range from 10% to 25% of your home’s insured value.
Q: How can I buy earthquake insurance?
A: You can buy earthquake insurance through various insurance companies that offer specialized policies. It is recommended to compare different insurance products and discuss your options with an insurance agent to find the best coverage for your needs.
Q: What does earthquake insurance not cover?
A: Earthquake insurance does not cover damages caused by flooding, landslides, or other natural disasters unless specified. It is important to review your policy thoroughly to understand the exclusions and limitations.
Q: What should I know about earthquake insurance before purchasing?
A: Before purchasing earthquake insurance, you should know the coverage limits, deductibles, and what types of damages are included. Additionally, consider your location’s seismic risk and consult with an insurance agent to find the best earthquake insurance provider for your needs.
Q: How do I find the best earthquake insurance companies?
A: To find the best earthquake insurance companies, research customer reviews, check financial ratings, and compare quotes from multiple insurers. Speaking with an insurance agent can also provide insights into reputable earthquake insurance providers.
Source Links
- https://www.fema.gov/emergency-managers/risk-management/earthquake/insurance
- https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/eq-ins.cfm
- https://www.nerdwallet.com/article/insurance/earthquake-insurance
- https://www.iii.org/article/earthquake-insurance-for-homeowners
- https://www.bankrate.com/insurance/homeowners-insurance/is-earthquake-insurance-worth-it/
- https://www.progressive.com/answers/does-home-insurance-cover-earthquakes/
- https://www.geico.com/earthquake-insurance/
- https://www.earthquakeauthority.com/california-earthquake-insurance-policies/homeowners
- https://content.naic.org/insurance-topics/earthquake-insurance
- https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/upload/Earthquake_Insurance_Bro_J-linked.pdf
- https://content.naic.org/article/consumer-insight-understanding-earthquake-deductibles
- https://content.naic.org/article/what-are-earthquake-deductibles
- https://www.rocketmortgage.com/learn/earthquake-insurance
