“Southern California has about 10,000 earthquakes every year.”
– US Geological Survey
If you’re a California homeowner, there’s probably a small portion of your brain fully dedicated to thinking about earthquakes. (Was that a big truck rumbling by on the highway… or an earthquake? Did someone put sneakers in the dryer… or is that an earthquake?)
One way to manage the losses you might experience because of earthquakes is to purchase earthquake insurance. Here’s a high-level view of what you need to know about this kind of coverage if you own a home in California.
Earthquake insurance covers the expenses associated with earthquake damage. To get earthquake insurance in California, you must already have standard homeowners insurance.
If you have homeowners insurance and live in California, your carrier is required by law to offer to sell you earthquake insurance every two years. But the offer may be easy to miss: insurance companies must send it in the mail. To get coverage, you have to respond within 30 days of receiving the offer. If you make no reply, that’s the same as declining coverage.
Some insurers may offer very limited coverage from the California Earthquake Authority (CEA), a nonprofit organization designed to help Californians get earthquake coverage. Homeowners can’t buy insurance directly from the CEA; instead, they buy through their homeowners insurance provider, assuming that that provider is a member of the CEA.
In our case, we partner with GeoVera Insurance to offer more comprehensive earthquake coverage. They are rated “A” (Excellent) by A.M. Best.
GeoVera’s earthquake insurance comes as either a comprehensive or standard policy. It includes the coverage types outlined below.
|Type of Coverage||What It Covers||Coverage Limit||Deductibles|
|Dwelling Coverage (aka Coverage A)||Repairs to and reconstruction of your home itself, up to the limit established by your policy||Up to policy limits||10% to 25%|
|Other Structures (aka Coverage B)||Repairs to detached structures, like garages, satellite dishes, greenhouses, etc.||Up to policy limits (the standard policy excludes this coverage)||10% to 25%|
|Personal Property Coverage (aka Coverage C)||Repairs to and replacement of personal property damaged by the earthquake, up to your policy limit||Up to policy limits, though some items, like art and silverware, have a separate max limit of $3,000||10% to 25%|
|Additional Living Expenses (aka Coverage D)||The temporary costs associated with living in an apartment, hotel, or home while your primary home is being repaired||Up to 12 months if you have the comprehensive plan; $1,500 maximum for the standard policy||None|
|Engineering & Demolition Costs||The extra costs of demolition and removing damaged materials||Up to 5% of your policy limit||10% to 25%|
|Building Code Upgrade||The extra cost of bringing your home up to current building codes||$10,000||10% to 25%|
|Loss Assessment||Fees for shared repairs if you belong to a homeowners association||20% of the policy limit||10% to 25%|
|Debris Removal||The cost of removing debris||Up to policy limit (may be subject to 5% sublimit)||10% to 25%|
Earthquake insurance can also cover damage to pools, fences, detached walkways and patios, retaining walls, and chimneys, fireplaces, and masonry veneers. These coverages have special limits in the comprehensive policy and may not be available in the standard policy.
Broadly, earthquake insurance is designed to help you get back in your house as quickly as possible. Because earthquakes are super destructive, the suggested policy limits are usually pretty high.
Typical earthquake insurance policies don’t offer coverage for:
There is no law requiring California homeowners to carry earthquake insurance, but if you live in a high-risk area for earthquakes, purchasing this coverage is probably a good idea.
How can you determine whether you live in a high-risk area? FEMA outlines three factors that contribute to earthquake exposure:
That said, in California, everyone faces some degree of earthquake risk. To get an idea of whether or not you should buy this coverage, the California Department of Insurance recommends asking yourself these questions:
The takeaway: earthquake insurance may be expensive, but it’s almost certainly less expensive than rebuilding after an earthquake without insurance.
The average cost of earthquake insurance in the US is $800 a year, but that cost varies based on your situation. Your location in the state, how much your house would cost to rebuild, the type of construction used to build your house, the specific coverage types you choose, and the deductible you choose all impact your rate.
It’s possible to save money on premiums by choosing a higher deductible, but remember that you will ultimately be responsible for paying that deductible in order to access your rebuilding benefits.
Another way to save on earthquake insurance costs is to retrofit your home so that it’s more likely to survive an earthquake. Even older homes can benefit from retrofitting.
The best way to know what your coverage will cost is to get a quote.
Earthquake insurance, like any insurance, is a way to help you recover losses when things go wrong. California homeowners can also take steps to minimize the damage that occurs when an earthquake strikes. These include the following:
Not sure where to start? Take a trip to your local hardware store and ask the employees how to make your home safer in the event of an earthquake. They will likely have both the expertise and the actual products you’ll need.
Earthquakes aren’t the only natural disaster California homeowners have to worry about. To get a full idea of how to protect your home, read up on how to afford wildfire insurance as a California resident, the basics of flood insurance, and how to insure your pets.
Protect your home from the high cost of earthquake damage. Get a quote today.