You might not be thinking about earthquakes when moving into your new home, but depending on where you live, it might be something you have to deal with. You should always have a homeowner’s insurance policy, but not everBest Insurance Website Buildersyone can justify an earthquake insurance policy’s added cost. If your home is in an earthquake-prone region, you might want to see if there’s a policy available within your budget.

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Does my homeowner’s insurance cover earthquakes?

If you have a basic homeowner’s insurance policy, you might be covered for fire damage caused by an earthquake. However, your policy will not cover damages from the movement of the earthquake itself. If you want to protect yourself entirely from the impact of an earthquake, you’ll need additional coverage. Sometimes your insurance company will allow you to just add this to your existing homeowner’s insurance policy. Otherwise, you can purchase earthquake insurance as a standalone policy.

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What’s covered by earthquake insurance?

A basic policy will cover three main areas:

  • Personal Property: the cost of personal belongings including but not limited to clothing, furniture, appliances, electronics, and other household items.
  • Dwelling Coverage: Any damage to the physical building and the structures attached to it will be covered by an insurance policy. Costs associated with repairs and rebuilding structures like an attached garage or backyard deck are covered.
  • Alternative Living Expenses: traditional homeowners and renters insurance doesn’t typically provide coverage for expenses related to earthquakes. If your home was damaged by an earthquake, you’ll want to get the repairs started immediately. An insurance policy would cover the cost of your temporary living expenses while your home is returned to a whole state.

Of course, most insurance companies will be happy to offer policies that offer more than just your basic coverage. If earthquakes are something that affects your area, it’s worth crunching the numbers to see how much disposable income you might be able to put towards it.

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How much does earthquake insurance cost?

According to the California Earthquake Authority, only a mere 10 percent of California residents have an earthquake insurance policy. With numbers that low, it isn’t surprising to find out earthquake insurance is one of the more expensive types of insurance. Unless you really feel at risk, chances are you might not want to invest in a policy. The most effective way to measure if earthquake insurance is for you is to consider what you have to lose and what repairs might look like, should any damage to your property occur. If the potential costs of repairs and replacements far outweigh the monthly insurance payment, you’re a good candidate for a policy.

The cost of earthquake insurance varies widely across the country, with the most expensive policies covering the most at-risk areas. According to Rocket Mortgage, premiums can cost you anywhere from $800-$5,000 annually. You can expect high deductibles as well, ranging from 10-20% of your total coverage limit. It’s important to understand what these numbers mean because if your home has a high value, you’ll wind up paying a lot of money before your insurance coverage kicks in. Depending on the dollar amount, you’ll be able to measure more closely if investing in a policy is the right move or not.

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Do I need earthquake insurance?

The United States Geological Survey (USGS) provides detailed information on what to consider when thinking about earthquake insurance. Knowing what to expect in terms of premiums and deductibles, now you can think about how necessary earthquake insurance is for your home.

When thinking about earthquake insurance for your home, you’ll want to consider:

  • Frequency of earthquakes in the region
  • Geological structure of earth underneath the building
  • Proximity to earthquake faults
  • Construction of the building
  • Architectural layout
  • Building materials and quality of workmanship
  • Soil conditions
  • Annual rainfall and slope of the land

It should also be noted that not all earthquakes cause catastrophic damage. For example, a lot of people in California might be used to feeling a rumble that doesn’t cause anything more than a rattle of a dish.

Of course, other factors to consider exist, and some even recommend getting a professional to evaluate your home and situation. Even if you don’t wind up investing in earthquake insurance, speaking with an expert will certainly save you time and money in the long run.

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What damage do I need to worry about?

The majority of earthquakes that occur are nothing to be too concerned about. They might be felt in the ground and measurable on a seismic scale, but nothing strong enough to cause any lasting damage. However, if a more disruptive one comes along, there are all kinds of damages that can follow.

  • Partial or total collapse: If an earthquake causes the foundation of your home to move, you might face damages that cause a partial or even complete collapse of the roof and supporting walls of the house.
  • Structural damages: Depending on the location of the activity, you might find structural damages throughout the house that cause a danger to inhabitants. Just because a house hasn’t collapsed, doesn’t mean it doesn’t pose a risk to your safety.
  • Fires and explosions: Earthquakes can often be a catalyst to a set of other dangerous events, like fires if something becomes ignited, or explosions if a reaction occurs.
  • Flood and Water Damage: Since earthquakes can often change the foundation of a structure and create separation where there is meant to be a seal, water damage is a common side effect.

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The Bottom Line

It can feel difficult to justify investing a lot of money into something that isn’t guaranteed to give you a return. When it comes to insurance, your ultimate goal is to protect yourself so that if something does happen, you can become “whole” again. This is typically accomplished with a financial sum if there are expenses to cover and other times with physical repairs and replacements.

In order to determine if an earthquake insurance policy is right for you, you have to first have an understanding of the value of your assets, and what it would look like if you needed to replace everything, including your home. With this in mind, you should consider the actual likelihood of an earthquake-related event near your home. If you live in a region like California, where the rates of occurrence are high, chances are you stand to benefit from the financial security of an earthquake policy, even if there might be a hefty upfront cost. If you live in the Northeast where an earthquake would be breaking news, it might not be worth the chunk out of your paycheck.

If you live in a high-risk area and still don’t want to pay for a policy, it really only benefits you if you still owe a lot of money on your mortgage. For instance, if something were to happen and an earthquake completely destroyed your home, you wouldn’t have a way to replace it, but you might also be off the hook for whatever was left on the mortgage. Conversely, if you’ve spent decades paying off your mortgage, the high cost of insurance might be worth it. Overall, deciding on something as particular as earthquake insurance really depends on an individual and the factors that determine premiums and deductibles. If you would like to learn more about what a policy might look like for you, the best place to start is with your current homeowner’s insurance provider.

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