Earthquakes are a reality for Californians. Living in a state crisscrossed by fault lines means that the risk of a major earthquake is ever-present. According to the California Department of Conservation, the state experiences two to three earthquakes a year that are large enough to cause moderate damage to structures (5.5 or higher).
The United States Geological Survey tracks earthquakes worldwide. During the writing of this blog, California experienced four earthquakes in one day.
Your home is likely your family’s largest asset that needs to be protected. First, review your homeowner’s insurance policy to understand what is covered and what is not.
Pay attention to the details regarding natural disasters. Hail, tornadoes, high winds, lightning strikes, wildfires, volcanic eruptions, and winter storm damage are typically covered, but not damage from an earthquake. You will need to purchase a separate earthquake insurance policy.
For homeowners, renters, and landlords alike, the question often arises: Is earthquake insurance worth it in California?
Understanding Earthquake Insurance
Earthquake coverage isn’t required by law, but with the state’s history of seismic activity, it’s something every Californian should consider. There is no arguing, California is a high-risk area. If the ground beneath your home shifts and causes structural damage, you could be left with a hefty repair bill.
For those searching for the most affordable earthquake insurance, finding a policy that meets your needs and budget can make all the difference. Whether you’re a homeowner, renter, or business owner, understanding the details behind competitive earthquake insurance policies is critical.
What Does Earthquake Insurance Typically Cover?
Earthquake insurance typically covers specific damages and losses resulting from an earthquake. While coverage can vary based on the policy and provider, here are the common areas it typically includes:
1. Structural Damage to the Home
- Repairs or rebuilding of the main structure of your home if it’s damaged or destroyed by an earthquake.
- Coverage may also extend to attached structures, such as garages..
2. Personal Belongings
- Replacement or repair of personal property damaged during the earthquake, including furniture, electronics, and appliances.
- Some high-value items (e.g., jewelry, art) may have coverage limits or require additional riders. (An insurance rider is an add-on to expand coverage and will have its own fee.)
3. Additional Living Expenses (ALE)
- Temporary housing costs if the home becomes uninhabitable due to earthquake damage.
- May include expenses for hotels, meals, and other related costs.
4. Repairs for Land Stabilization
- In some cases, policies cover repairs for land stabilization if the ground beneath the home has been damaged.
- This can include retaining walls or backfill to stabilize the property.
What Earthquake Insurance Usually Does Not Cover
- Pre-existing damage or damage unrelated to an earthquake (e.g., flooding, fire, or sinkholes).
- Detached structures like pools, fences, or outbuildings unless specifically included.
- Vehicles, which are typically covered under auto insurance. (Note: Car insurance may cover earthquake damage but it’s a good idea to double check)
- Costs that fall below the deductible, which can be quite high for earthquake policies.
To fully understand what is and isn’t covered in your earthquake policy, it’s important to carefully read the terms of your specific policy or consult with your insurance provider.
California’s Earthquake Risk. Is Earthquake Insurance Worth It?
California has experienced some of the most significant earthquakes in U.S. history. The potential for massive property damage makes earthquake insurance an important consideration for residents.
One of the surprising facts about California’s earthquake story is that the state frequently experiences earthquake storms. These are periods of time when earthquakes and tremors occur in a relatively short period of time.
Should I Get Earthquake Insurance in California?
If you own a home in California, you’ve likely asked yourself this question. The answer largely depends on factors such as your home’s location, construction type, and your financial situation. Areas near major fault lines like the San Andreas or Hayward Fault are at higher risk, making insurance more compelling.
You already know that California has a high risk of earthquakes. What will you do if your home incurs major damage from an earthquake? Is earthquake insurance worth it?
Here are some specific questions California residents should ask when considering earthquake insurance:
- How close do you live to an active fault?
- How often do you experience earthquakes where you live?
- How long has it been since the last quake?
- What materials were used in your home’s structure?
- How old is your home?
- What other structures are on your property? Free standing garage, pool house, gazebo, retaining wall, electronic privacy gate?
- What is the soil condition of the land where your home is built?
- What is the slope of your property? Are you built on the edge of a hill or flat land?
- What is the value of the contents of your home?
- How much is your mortgage? How much equity do you have?
- What is the cost of rebuilding your home if it incurs significant damage?
- How healthy is your financial situation?
- What does earthquake insurance cost? What are the premiums and deductible?
Do Most Californians Have Earthquake Insurance?
According to the Federal Emergency Management Agency (FEMA) only about 10% of California homeowners have earthquake insurance. Many opt out due to cost, high deductibles, or the belief that a catastrophic earthquake won’t happen to them. However, this low uptake leaves many vulnerable to financial ruin after a major quake.
California Earthquake Insurance Pros and Cons
Deciding whether to invest in earthquake insurance in California requires weighing its potential benefits and drawbacks or challenges. Purchasing crucial financial protection against seismic damage requires serious consideration. Read more in a separate article that delves deeper into the pros and cons of California earthquake insurance. We cover the highlights below:
Benefits of Earthquake Insurance
- Financial protection against catastrophic repair costs.
- Peace of mind for homeowners in high-risk areas.
- Availability of assistance for temporary housing and rebuilding.
Drawbacks of Earthquake Insurance
- High deductibles can make minor damage not worth claiming.
- Premium costs that may not fit every budget.
- The possibility of paying premiums without ever filing a claim.
- Policies may not cover everything (e.g., landscaping or outbuildings).
How Much Is Earthquake Insurance in California
The cost of earthquake insurance varies widely depending on your location, the value of your home, and the coverage you select. On average, earthquake insurance premiums range from $800 to $5,000 annually. Insurance providers vary in their approach to setting premiums and deductibles, handling claims, customer service, etc. It’s critical to do your research. How much is earthquake insurance in California?
Earthquake Insurance Deductibles
Another question that is important for you to understand before you buy earthquake insurance is how deductibles work. Deductibles typically range from 5% to 25% of your home’s insured value. For a $500,000 home, a 10% deductible means you’d pay $50,000 out of pocket before insurance kicks in. This high threshold can deter some homeowners from purchasing a policy.
How to Choose an Earthquake Insurance Company
Take the time to research the insurance companies, compare costs and coverage, and read company reviews and evaluate the company reputation. In the event of an earthquake, you want to have the peace of mind that the insurance company will be there for you as you make your claims.
Here are a few questions to consider as you research insurance products and insurance providers service levels:
- How easy is it to get a quote?
- Do they offer payment plans?
- What is the claim experience like?
- Compare deductibles, premiums and the fine print.
- Call customer service to get your questions answered.
- Can you work directly with a personal insurance agent so you have their name and phone number?
- Ask your neighbors and friends in California if they have coverage and who they use?
- Try reading Google Reviews or checking with the Better Business Bureau to research the insurance company.
California Earthquake Authority, the CEA is not the only provider of earthquake insurance in the state. While their policies are reliable, they come with high deductibles and premiums that can make some homeowners hesitate.
QuakeInsurance by Geovera
Standalone earthquake insurance in California is available through QuakeInsurance by Geovera, a private insurer that also offers comprehensive affordable earthquake insurance options. Request a free quote today.
Deciding whether earthquake insurance is worth it in California comes down to weighing the risks against the costs. With the state’s high earthquake potential, having a policy can mean the difference between financial devastation and recovery.
How can you be best prepared for the next time an earthquake strikes? The next time is inevitable. Will you be prepared?
If you’re ready to explore your options for affordable earthquake insurance, start by comparing quotes from multiple providers so you can make an informed decision. Don’t wait until the ground starts shaking—protect your assets and your peace of mind today.
QuakeInsurance by Geovera offers you peace of mind at an affordable price. As the only A rated company to offer stand-alone earthquake insurance online direct to homeowners, QuakeInsurance by GeoVera is known for providing remarkable digital experiences in the insurance industry. Request a quote today.
