Impossible to predict, earthquakes can cause major damage to your personal property and home. It is a common assumption that homeowners insurance covers earthquakes and other natural disasters, but this isn’t always the case.
Earthquake insurance is one way to protect your most valuable asset: your home.
What You Should Know About Earthquake Insurance
- Damage from earthquakes is not covered by a standard homeowners policy. Similar to flood insurance, earthquake insurance must be purchased separately.
- Earthquake coverage can be added as an endorsement on your homeowners policy or purchased as a separate policy.
- Many insurance companies have specific enrollment periods for earthquake coverage. If you choose not to add the coverage when you purchase a homeowners policy, you may need to wait until your policy renews to add the coverage.
- If the insurance company has specific enrollment periods for earthquake coverage, you may receive an offer for the coverage with your renewal policy. This coverage is typically offered every other year.
How Will Earthquake Coverage Help?
If you have a typical home loan and deed of trust, you will remain responsible for the loan balance even if your home is damaged or destroyed by an earthquake. The deductible and amount of coverage available for earthquake damage vary by state.
Earthquake insurance is excluded from your standard renters insurance policies. However, you can add standalone earthquake insurance to your policy or add an earthquake endorsement. An endorsement will cover your personal property if damaged by an earthquake.
Earthquake coverage can help towards the costs associated with earthquake damage, such as:
- Replacing the contents of your home.
- Temporary accommodations.
- Repairing or replacing your home.
- Paying a mortgage, second mortgage, or line of credit on your home if your home is destroyed.
How Much Does Earthquake Insurance Cost?
In Utah & Idaho:
Earthquake is excluded from a standard homeowners policy unless endorsed. Not all homes qualify for earthquake insurance due to proximity of the home to an active fault line or other factors.
Factors impacting rate and eligibility may include dwelling coverage, deductible, age of home, style/number of stories, foundation, and exterior wall covering. Unlike a typical homeowners policy, the deductible is a percentage of the dwelling coverage which ranges from 5% to 25% depending on the insurance carrier and coverage selected.
Availability of earthquake coverage is limited in states with active fault lines and may not be available as an endorsement on the homeowners policy. A separate catastrophe policy may be available to supplement the homeowners policy. Carriers restrict issuing new earthquake coverage after a recent earthquake.
In California there are a handful of insurance carriers to select from for earthquake insurance. The most popular is the California Earthquake Authority (CEA) which offers coverage for homes, mobile homes, condos, and renters. The CEA is unique because the policyholder has an option of what coverages and deductibles they would like to purchase. The deductible options range from 5% to 25%, which is based off of the dwelling coverage limit. The dwelling coverage amount on the earthquake policy must match the limit of your underlying home policy.
The CEA has two plans available: Homeowners Choice and Standard Homeowners.
Under the Choice program, coverage is automatic for the dwelling, building code upgrade, and emergency repairs. You may choose to include personal property under this program. The Choice program is flexible, allowing policyholders to choose the coverages and options that best meet their needs and budget.
Under the Homeowners program, the following coverages are bundled: dwelling, personal property, building code upgrade, loss of use, and emergency repairs.
Other optional coverages (available under both programs) include coverage for breakables (for items such as dishes and ceramics), debris removal, and the optional coverage for exterior masonry veneer.
Mitigate Damages and Risk of Injury
Earthquakes can cause devastation any time of the year and without warning. Taking steps to secure the furnishings in your home may help prevent injuries and mitigate damages should an earthquake occur.
Here are some steps you can take to protect your family and your home:
- Secure bookcases and shelves to prevent them from toppling over and causing injury or damage.
- Attach cabinets to the walls and floors to prevent them from falling over and to keep their contents safe.
- Securely anchor large appliances to the wall and brace your water heater.
- Consider using shatter-resistant Teflon fluorescent lights, or install plastic sleeves over the light tubes to keep glass from scattering if they break.
- Secure heavy equipment such as televisions and computers to the furniture on which they are placed.
- Use closed screw eyes instead of traditional picture hangers to secure pictures and other valuable artwork to the walls.
Please reach out to your insurance agent to discuss the right solution for your needs.