Earthquake Insurance

June 03, 2024

An earthquake is a sudden and rapid shaking of the Earth caused by the breaking and shifting of rock beneath the Earth’s surface. This seismic activity can sometimes trigger landslides, avalanches, flash floods, fires, and tsunamis. Millions of people across 39 states in the United States are at risk for damage from earthquakes, yet surprisingly few purchase earthquake insurance to protect their property1.

Here are some key points about earthquake insurance:

  1. Coverage Availability:
    • Earthquake coverage is not included in standard homeowners or business insurance policies.
    • Earthquake insurance is available either as an endorsement (added to an existing policy) or as a separate policy for homeowners, renters, and small business owners.
    • Private insurance companies, rather than the government, offer earthquake coverage.
  2. Types of Damage Covered:
    • Earthquake insurance covers repairs needed due to earthquake damage to your dwelling. It may also cover other structures not directly attached to your house, such as a garage or shed.
    • However, coverage for other types of damage resulting from earthquakes (e.g., fire and water damage due to burst gas and water pipes) is typically provided by standard home and business insurance policies in most states.
  3. Deductibles and Costs:
    • Earthquake insurance carries a deductible, usually expressed as a percentage of the replacement value of the structure. Deductibles can range from 2% to 20%.
    • For example, if it costs $500,000 to rebuild a home and there’s a 2% deductible, the consumer would be responsible for the first $10,000.
    • Insurers in states with higher earthquake risk (e.g., Washington, Nevada, and Utah) often set minimum deductibles around 10%.
    • Premiums vary widely by location, insurer, and the type of structure covered. Older buildings generally cost more to insure than new ones, and wood frame structures tend to have lower rates than brick buildings due to better quake resistance.

In summary, while earthquake insurance isn’t automatically included in standard policies, it’s essential for those living in seismically active areas to consider this coverage to safeguard their property against the unpredictable forces of nature1.

Are you prepared for the next earthquake?  Click here for FEMA’s Earthquake Safety Checklist.