How is my earthquake insurance coverage limit calculated?

What You Need to Know about Earthquake Insurance Valuation

How is my earthquake insurance 
coverage limit calculated?

You provide us with the homeowners Coverage A amount. 

We calculate the Replacement Cost Estimate based on your home’s features.

We compare your homeowners Coverage A amount against the Replacement Cost Estimate to help you determine the most accurate amount necessary to rebuild your home.

We add for demand surge.

We add the additional coverage options that you choose for Other Structures, Personal Property, and Loss of Use.

The result is your calculated earthquake insurance coverage limit.

Why do you ask for the “Coverage A” amount from my homeowners insurance policy?

During our quoting process, we use the Coverage A Dwelling limit on your homeowners insurance policy to begin to determine the most accurate replacement cost estimate for your home. Think of it as a starting point for your earthquake insurance policy limit.

What is Homeowners Coverage A?

The Coverage A limit on your homeowners insurance policy is the amount that your homeowners insurance carrier or agent has determined as an acceptable amount to rebuild your home in the event of a total loss. It is listed on the homeowners insurance policy as the coverage limit for the home, or the “Dwelling.”  

What is my Replacement Cost Estimate?

Replacement Cost Estimate of your home is an estimate of the cost to rebuild your entire home. This amount is not the same as the market value of your home, which would include the value of the land, and can fluctuate due to factors unrelated to construction costs.

Location, age of the home, custom or unique features, and cost of materials are among the factors that can influence the replacement cost estimate.

Replacement cost is not:

  1. The market value of your home
  2. What you paid for your home
  3. The outstanding amount on any mortgage loan

Replacement Cost vs Market Value

As a homeowner, you are probably familiar with the market value of your home. Market value is the amount of money that it would cost to buy your home and property. This figure does not account for the actual cost of rebuilding your home, because the market value can fluctuate due to factors unrelated to the building expense.

Factors that change the replacement cost of a home from year to year:

  1. Interior upgrades, like kitchen or bathroom remodeling
  2. Adding rooms or living space
  3. Changes in expenses related to building costs (material, labor, and equipment).

Getting the most accurate Replacement Cost Estimate for your home.

Your homeowners Coverage A limit was calculated with your homeowners agent or company to determine the replacement cost of your home. We take advantage of this detailed work to save you time in determining the most accurate amount necessary to rebuild your home. You can also use our Replacement Cost Estimate tool to obtain a replacement cost estimate for your home with your home’s specific features.

What is demand surge?

After a catastrophic event, there is an increase in the price of materials and labor due to a shortage of availability. We add 20% for Demand Surge to account for these price increases.

Why your earthquake policy includes demand surge

Earthquake insurance prepares you for a major catastrophic event that can impact you, your neighbors, and your community.

What else can my earthquake insurance policy cover?

Other Structures

 This coverage is for structures that aren’t attached to your home and not considered part of the dwelling. “Other Structures” may include a detached garage, storage sheds, greenhouses, and more. 

Personal Property

Our earthquake products can also offer coverage for your personal property contained within your home. This may include items such as furniture, clothing, and appliances.

Loss of Use

You or your tenant may be displaced from your home after an earthquake. Loss of use or fair rental value coverage can help pay for additional living expenses for temporary housing and living expenses or the loss of rental income while your home is being rebuilt or repaired.

Your calculated earthquake insurance coverage limit.

You will need to compare the Earthquake Single Limit to the total of all of your homeowners split limits. If your earthquake dwelling limit (before adding demand surge) is lower than your homeowners limit, or if you choose to lower your homeowners limit or calculated earthquake insurance coverage limit, a careful analysis needs to be completed to verify that the Replacement Cost Estimate reflects the unique features of your home.

Earthquake Insurance Frequently Asked Questions

What kind of earthquake coverage is available?

Combined Single Limit

A single limit policy provides one limit for all coverages combined in your policy. This policy offers more flexibility to use your coverage where you need it most after an event rather than split limits by coverage type.  

Split Limit

A split limit policy is structured more like a typical homeowners policy. There are separate limits by coverage type: Dwelling (your home), Other Structures, Personal Property, and Loss of Use coverage.

What earthquake products are offered?

Earthquake insurance is available through GeoVera Insurance Company and Coastal Select Insurance Company. We are licensed to offer earthquake insurance in California, Oregon, and Washington. GeoVera Insurance offers the Comprehensive and the Standard earthquake insurance policies, and Coastal Select offers the Premier EQ Protector, the Security Protector, and the Condo EQ protector. Both of our insurance carriers are rated “A” (Excellent) by A.M. Best Company.

How do your earthquake insurance products compare?

The single limit policy offered by GeoVera provides one limit for your home (dwelling), other structures, personal property (contents), and loss of use (additional living expenses or fair rental value). The single-limit policy also includes one deductible that is applied to one coverage limit. 

The split limit policies provided by Coastal Select provide separate coverages with separate deductibles for your home, other structures, personal property, and additional living expenses. 

Both of our insurance carriers also offer a more basic policy designed to primarily cover your home with reduced coverage for personal property and additional living expenses for a reduced premium cost.

Not sure which solution fits you best? We are here to help.

Find your earthquake insurance agent in California, Oregon, or Washington who can guide you with expert advice, answer your questions, and create the best plan for your financial security. 

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