Is earthquake insurance really worth it?
Since they have the potential to do catastrophic damage, earthquakes are fascinating and enigmatic, especially given that we have no reliable means to forecast when they will occur. Several little, unreported earthquakes cause difficulty for homeowners and renters all around the US, in addition to the major ones that receive international notice.
According to Earthquake Track, there have been well over 50,000 earthquakes in the last 365 days. Because of this, you should obtain adequate loss coverage for your home and other valuables, regardless of the earthquake’s Richter scale severity.
Here are some of the topics we’ll discuss in order to address your most pressing inquiries concerning earthquake insurance:
What Is Earthquake Insurance?
Is earthquakes covered by renters or homeowners insurance?
• What does earthquake insurance cover?
• Deductibles and earthquakes
• How much does earthquake insurance cost?
Is earthquake insurance necessary?
• Is earthquake insurance worthwhile?
Where can I purchase earthquake insurance?
What is earthquake insurance?
Your home, personal property, temporary housing, and other costs associated with earthquakes are all covered by earthquake insurance. You can purchase it from a company that specializes in selling earthquake insurance, or you can add it to your homeowners insurance policy in most states.
Geography 101: An earthquake is a violent shaking of the earth’s surface brought on by fault lines in the earth, which can be destructive to a home’s structure and surrounding property. 148 million people in the United States are at danger of earthquake damage, and mining and fracking are additional causes of earthquakes in some areas of Oklahoma.
The potential cost of earthquake-related damage has increased over time as structures age and new urban projects spring up in seismically active regions.
Does earthquake insurance cover renters and homeowners?
No. If you reside in a high-risk area, you’ll probably need to get a supplemental policy in addition to your standard homeowners or renters insurance coverage because damage caused by earthquakes is not covered by these plans.
A fire that occurs after an earthquake, which is a frequent result of an earthquake, may be covered by some homeowners insurance plans.
What does earthquake insurance cover?
Your policy will cover the following if an earthquake occurs:
1. Dwelling coverage: If you have homeowners insurance, this protects against damage to your house and any attached structures, such as a garage or pool.
2. Personal property coverage: Payment for the replacement cost of your destroyed property.
3. Loss of use coverage: Any additional costs you might incur, such as a hotel, takeout, and parking if you can’t stay at home.
Just so you know, your earthquake insurance coverage won’t cover damage from: Floods, Sinkholes, or Vehicle Damage.
• Fires
Deductibles and earthquake insurance
In a nutshell, an insurance deductible is the sum of money you decide upon when buying a policy that will be deducted from any future claim settlements.
Deductibles for earthquake insurance typically range from 15 to 20 percent of the coverage maximum for your dwelling. If you file an insurance claim, you’ll have to pay more out of pocket because cities developed near or on active fault lines will have higher deductibles.
Let’s assume that your deductible is 20% and that your housing coverage is $200,000. You are responsible for paying $40,000 up front before your insurance begins to pay out if you file a claim for $200,000 for damage to your house.
How much does earthquake insurance cost?
In the US, earthquake insurance typically costs $800 a year. Remember that a single-family home in California may cost more to insure; for $500,000 of coverage, the cost ranges from $1,248 to $2,744 yearly.
However, the precise cost of an earthquake insurance policy will be determined by your coverage limits, deductibles, and a number of additional considerations, such as your zip code, the age of your home, the distance from fault lines, the material of your house, and the cost to rebuild your home.
The California Earthquake Authority’s (CEA) premium calculator can be used by Californians to determine the cost of earthquake insurance.
Do I need earthquake insurance?
It depends. Even though earthquake insurance isn’t required, it’s possible that your home could be severely damaged. There is no regulation requiring anyone to actually buy a policy, but California law mandates homeowners insurance firms to offer additional earthquake coverage.
According to California Earthquake Authority Director Glenn Pomeroy, only 13% of Californians buy earthquake insurance because they don’t believe it will happen to them. Many also think that their renters’ or homeowners’ insurance will protect them against earthquake damage.
Contrary to popular belief, which holds that only California is at high risk for earthquakes, there are 42 other states that are as susceptible to earthquakes, 16 of which have recorded quakes with a Richter scale magnitude of six or higher.
Consider buying an earthquake insurance coverage if you don’t already have the cash set aside to compensate for the costs of temporarily residing elsewhere while your home is being rebuilt, as well as to replace any lost personal property. Remember that budget would be in addition to ongoing mortgage repayment expenses, even if your house has been fully destroyed.
Just so you know, insurance companies often won’t sell new coverage for a few months if an earthquake has recently occurred in your neighborhood.
Is earthquake insurance worthwhile?
Others claim that earthquake insurance is expensive and not worth the money because of the high deductibles and premiums.
Understanding the possible danger of where you live is the first step in determining whether an earthquake insurance coverage is worthwhile for you. You may estimate the likelihood of an earthquake occurring in your location by using this map from the USGS (you might be startled to learn that you’re closer to a fault line than you thought).
You may decide that it is worthwhile to purchase a coverage for about $25 per month for peace of mind because insurance costs decrease the further you are from a fault line.
Where can I purchase earthquake insurance?
Numerous insurers provide earthquake insurance as an add-on to their basic homeowners coverage.
With our partners, Palomar, Lemonade provides Earthquake Insurance to our California homeowners insurance policyholders for a few more dollars each month. This add-on increases your coverage for any physical damage caused by an earthquake incident to your belongings.
It’s important to note that Lemonade currently provides coverage for direct loss brought on by earthquakes, like as fire, explosion, and theft.
Don’t put yourself in danger.
If homeowners live in flood zones, banks force them to purchase flood insurance, but not earthquake insurance. As a result, homeowners frequently leave their properties without a backup plan.
It’s important to acquire earthquake insurance if you live on a fault line or in an area that has fracking. You should also always have homeowners or renters insurance.