The Truth About Earthquake Insurance

An earthquake’s potential for devastating devastation makes it both interesting and mystical, especially since we have no real way of anticipating when it will happen. After the major earthquakes that received worldwide attention, many small, undocumented earthquakes went unreported and caused hardship for homeowners and renters across the US.

There were 58,984 earthquakes in the previous 365 days, according to Quake Track, so when it comes to protecting your home and individual property from earthquakes, you want to be well protected against loss, regardless of stamina in the Richter range.

Earthquake insurance covers you for earthquake-induced damage, from damage to your home and individual property, to short-term living arrangements. It is available in most specifications in addition to your homeowner’s insurance coverage, or you can purchase it from a provider that focuses on selling earthquake coverage.

Location 101: An earthquake is an extreme shaking of the Earth’s surface, triggered by cracks in the planet, also known as fault lines, that can destroy the framework of houses and extended property. 148 million Americans are in danger of earthquake damage, and fault lines aren’t the only reason for earthquakes — fracking and mining also caused earthquakes in part in Oklahoma, due to circumstances.

The potential for earthquake losses continues to increase as the structure ages, and more and more metropolitan developments emerge in locations at high risk of earthquakes.

No. Homeowners and renters insurance coverage doesn’t cover earthquake-induced damage, so if you live in a high-risk location, you’ll likely need to purchase a different plan, along with your basic landlord or tenant insurance coverage.

Some homeowners insurance coverage may cover issues triggered by a stop after an earthquake, which is a common impact of earthquakes.

If an earthquake occurs, your plan will include:

  1. Home coverage: If you are a property owner, this includes damage to your home and additional framework, such as a garage or swimming pool.
  2. Individual property coverage: Reimbursement of replacement costs for your damaged property.
  3. Loss of use coverage: Any additional fees you may need, such as resort, take-away and parking if you can’t stay home.

FYI, your earthquake insurance coverage will not cover damage due to:

Quick recap: insurance deduction is the amount of money you choose when purchasing a plan that will be deducted from future claim payments.

When it comes to earthquake insurance, deductibles tend to be high, somewhere between 15-20 percent of your home coverage limit. Cities that are better built or on energetic fault lines will have a greater deduction, so you’ll pay more if you file an insurance claim.

So, let’s say your home coverage is $200,000, and you have a 20 percent insurance deduction. If you file an insurance claim for $200,000 for damage to your home, you are liable to pay $40,000 before your insurance begins.

The average cost of earthquake insurance in the US is $800 per year. Keep in mind that insuring a single-family home in California can be more expensive — anywhere from $1,248 to $2,744 per year for $500,000 coverage.

However, the exact price of earthquake insurance coverage will depend on the limit of coverage, deductions, and several other factors, which include:

Btw, California residents can use the California Earthquake Authority (CEA) premium calculator to get a quote for how much earthquake insurance costs.

Depends. Earthquake insurance is not mandatory, but depending on where you live, your home may be at risk of irreparable damage. California law requires homeowners insurance providers to offer additional earthquake protection, but no law requires anyone to actually purchase a package.

A modest 13 percent of Californians buy earthquake insurance because people don’t think it’s most likely to happen to them, according to California Quake Authority CEO Glenn Pomeroy. They also mistakenly think that homeowners or renters’ insurance coverage will protect them from earthquake damage.

While people tend to think only the California location is at high risk, there are actually 42 other locations that are also prone to earthquakes, 16 which saw earthquakes measuring 6 or greater in the Richter range.

If you don’t have the cash deposited to reconstruct your home, repurchase your personal belongings, and spend it on short-term living expenses, you should definitely consider purchasing earthquake insurance coverage. Remember, the budget is in addition to continuing costs to pay off your home loan, also if your home is completely destroyed.

FYI: If an earthquake has just occurred in your location, the insurance provider will usually not sell you a new package for a few months.

The Truth About Earthquake Insurance

Some suggest the high price of deductibles and fees make earthquake insurance expensive – and therefore not worth the cash.

To determine if earthquake insurance coverage is appropriate for you, start by developing the potential risks where you live. Use this map by the Integrated Specific Geological Survey to determine the likelihood of an earthquake occurring in your location (you may be surprised to find that you are better off the fault line than you think).

The further you are from the fault line, the cheaper the plan will be, so you might decide to buy a plan for around $25 per month for warranty.

There are many insurance providers that offer earthquake insurance in addition to their standard homeowner plans. If you are interested in including coverage for your plan, ask your insurance company if they offer Earthquake Insurance in your specifications, and how much will be included for your monthly costs.

At Lemonade, we provide Earthquake Insurance to our California homeowners insurance policyholders through our partner, Palomar, for just a few extra dollars a month. This add-on extends the coverage for your belongings for any physical damage by earthquake events.

Financial institutions require homeowners to purchase flood insurance if they live in a flooded area, but the same is not true for earthquake insurance. Because of this, homeowners often leave their homes without a backup plan.

If you stay on the wrong track or are close to a location experiencing fracking, it’s a good idea to purchase earthquake insurance, and of course, always have tenant or landlord insurance coverage.

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