Earthquakes: When Homeowners Insurance Is Not Enough

People are still shocked that Californians experienced a 6.4 magnitude earthquake on the 4th of July and a 7.1 earthquake the next day, which was an aftershock. Everyone’s talking about a catastrophic earthquake hitting California (as usual) and some scientists think that southern California is at risk for high-magnitude aftershocks for at least a year to come. 

California’s “Big One” has become somewhat of a legend, and like many legends, the idea of destructive earthquake has seemed fictional until this past week, which reminded many people that they need to be prepared for a devastating earthquake no matter where they live. Luckily, there were no deaths and no injuries this time around, but there was property damage and destruction. From the destruction they see in their vicinity, many people in southern California are learning that their homeowners insurance is not enough. 

These recent earthquakes in California were an important reminder that earthquakes are an important factor to consider when buying homeowners insurance. The majority of California’s homeowners know that earthquake insurance is a separate policy and that earthquakes are not covered by a standard homeowners insurance. This is because it’s mandatory for insurance agents selling homeowners insurance to offer it to all California residents. However, some people only became aware that some of their losses were not covered because they did not buy earthquake insurance this past week. Not only are Californians now seriously preparing for the “Big One,” which geologists have said will take place along the San Andreas Fault, they are getting their financial house in order in case it happens soon. 

Is Anything Earthquake Related Covered by Home Insurance?

Most of the losses you’ll experience after an earthquake won’t be covered by home insurance: shattered windows, caved-in roofs and collapsed walls, broken televisions and destroyed structures will only be covered with earthquake insurance. Your personal belongings are also not covered after an earthquake. Destroyed computers and expensive appliances and equipment will not be covered by your standard homeowners insurance policy. The one thing that is covered by home insurance is fire that is caused by or follows an earthquake. Fire damage is covered whether you have earthquake insurance or not. 

Why Do I Need Earthquake Insurance?

Rebuilding a home is very expensive. It’s why you have a home insurance policy. However, if you need to rebuild your home after an earthquake you will not be covered without earthquake insurance. Government assistance is not enough to recover all your losses. Your personal belongings are also very expensive to replace without insurance. FEMA will certainly not reimburse you for these costs.

As for government assistance, FEMA is designed to take care of temporary shelter, food, clothing and medical assistance only. Loans to rebuild through FEMA must be repaid. Insurance claims are paid out and all you have to pay is the deductible, which are usually about 10% of the value of your home. For more details on what is provided by FEMA visit the FEMA website.

Which States Are the Most Prone to Earthquakes

An earthquake can occur in any state and so can damage to property as a result of an earthquake. However, there are states that are considered to be more prone due to proximity to fault lines: California, Washington, Oregon, Nevada, Wyoming, Utah, Missouri, Illinois, Tennessee, Arkansas, South Carolina and Kentucky. 

How Should I Prepare for an Earthquake?

You should begin to estimate how much it will cost to rebuild your home. If you can, have a contractor give you an appraisal for what it would cost to build it back to its current condition. After that, begin to create an inventory of your things so that you have an idea of how much to cover for personal belongings portion (contents) of your earthquake insurance. These two numbers are important to have when you figure out how much coverage to buy. Don’t just take a guess. You should have this all figured out in advance anyway. Also figure in the cost of temporary shelter and food while your home is being rebuilt.

Do I Have to Be a Homeowner to Buy Earthquake Insurance?

No, condo owners, mobile home owners and renters can buy earthquake insurance too. For a renter, you’d only be insuring your personal belongings so your policy will be much more affordable than for someone who owns a condo unit or a house.

Can I Buy Earthquake Insurance from My Homeowners Insurance Company?

Not all homeowners insurance companies offer earthquake insurance. If your homeowners insurance agent does not offer it through any of their carriers, consider getting new homeowners insurance quotes and choose a company that does offer it. You can start your free home insurance quotes here. In California, you can get earthquake insurance through the California Earthquake Authority (CEA). Insurance companies that sell homeowners insurance in California must work with the CEA to offer earthquake insurance. You can buy comprehensive policies or mini-policies which only cover the dwelling, excluding other detached structures. This all depends on how much you need to protect and how much you’re willing to spend. 

How Much Is Earthquake Insurance in California?

Earthquake insurance is not inexpensive. Premiums can range from $800 to $5,000 annually. Deductibles are 15% of the total value of the home.

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