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California homeowners aren’t the only Americans who need earthquake insurance. Large swaths of the United States face serious earthquake risks, and standard homeowners and renters insurance policies don’t cover them.
If you live in an area susceptible to these natural disasters, making earthquake insurance a priority in your budget can be a smart move.
Learn more about whether or not earthquake insurance is worth the cost:
Is earthquake insurance worth the cost?
Homeowners insurance doesn’t cover earthquake damage. Whether you own a house or rent an apartment, you must purchase an earthquake endorsement or rider (add-on) for your homeowners policy or a separate earthquake insurance policy to protect yourself against the risk of financial losses from earthquake damage.
Earthquake insurance can help with the following costs:
- Repairing or rebuilding your home and detached structures
- Making building code upgrades to your home when repairing or rebuilding
- Stabilizing the land under your home after a quake
- Replacing your damaged belongings
- Living somewhere else while your home is repaired or rebuilt
- Removing debris from your property
- Making emergency repairs to your home
Earthquake insurance typically includes the following types of coverage:
- Dwelling: This coverage pays to repair or replace your home’s structure if an earthquake damages or destroys it.
- Personal property: This pays to replace personal belongings damaged by shaking.
- Additional living expenses: Also called loss of use coverage, this pays for costs like hotel bills or rent so you can live elsewhere while your home is being repaired or rebuilt.
Did you know? In 2021, only 13% of California renters and homeowners carried earthquake insurance.
Drawbacks of earthquake insurance
Earthquake insurance comes with some drawbacks:
- Additional premium: Carrying earthquake insurance is an additional expense. It might feel like a lot when you’re already paying for homeowners or renters insurance.
- High deductibles: Earthquake insurance deductibles are usually a percentage of the cost to rebuild your home and can be much higher than homeowners insurance deductibles. For example, the lowest earthquake deductible available in your area might be 5%, and the highest might be 25%.
- Multiple deductibles: You might have to pay one deductible for your home’s structure and another for your possessions, for example. You also may have to pay your deductible twice if too much time (e.g., 72 hours) passes between shaking events.
- Incomplete coverage: Your earthquake policy may not cover damage to your land, such as repairs for sinkholes or cracks. It also may not cover masonry veneer (such as decorative brick or stonework), swimming pools, fences, landscaping, detached garages, and other detached structures.
- Multiple sublimits: You might be limited to $25,000 in coverage for glassware, crystal, china, and porcelain, and another $25,000 for fine art, for example. You might also have a sublimit for the cost of emergency repairs.
- Not a replacement for fire or flood insurance: Earthquake policies don’t cover indirect damage, such as fires or floods caused by earthquakes. You’ll need homeowners insurance and flood insurance for that.
As with any type of insurance, decide whether to get earthquake insurance by weighing the cost of the policy and the coverage it provides against your property’s earthquake risk and your ability to pay for the damage out of pocket.
If an earthquake might damage your home to the point where it would have to be completely rebuilt, earthquake insurance is almost certainly a good idea.
Good to know: If you own a condo, find out whether your homeowners association has earthquake insurance. A unit-owners policy will protect your personal property, but you’ll need additional insurance to cover the cost of HOA assessments to repair the building, which could be particularly high if your HOA isn’t sufficiently insured against earthquake damage.
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Who needs earthquake insurance?
It may be a good idea to purchase earthquake insurance if you live in one of the six states with the highest earthquake risk:
- Alaska
- California
- Hawaii
- Nevada
- Oregon
- Washington
Parts of many other states — southeast Missouri, northwest Arkansas, and western Tennessee, to name a few — also face major earthquake risks, according to the United States Geological Survey (USGS). If you live in Idaho, Illinois, Kentucky, Montana, Oklahoma, South Carolina, Utah, or Wyoming, you should also take a careful look at your susceptibility to quakes.
But it’s not just your general location that matters. The quality of your home’s construction — how well it was built to withstand earthquakes — is also important.
Here’s what we mean: If you live in or around Los Angeles or San Francisco, you have about a 50% chance of experiencing a magnitude 7 earthquake in the next 30 years, according to the USGS.
An earthquake that strong means that areas near the epicenter would experience shaking stronger than that magnitude, potentially causing substantial damage. Buildings farther away can expect slight to moderate damage.
If you see that your home is nowhere near a fault line, don’t assume you’re safe. Prolonged shaking from a fault tens of miles away can affect your home, and experts haven’t been able to identify fault locations for all the earthquakes in the eastern United States, according to the USGS.
Good to know: If there’s hydraulic fracturing in your area, you may be at increased risk of experiencing an earthquake — but most of these quakes are too small to cause significant damage, according to the USGS.
Related: What You Need to Know About Home Insurance When Buying a House
How to decide if it’s right for you
The USGS recommends considering the following factors if you’re trying to decide whether to buy earthquake insurance:
- How close you live to an active fault
- How often earthquakes have occurred in the area
- How long it’s been since the last earthquake
- Your home’s construction materials, workmanship quality, and foundation type (older homes, brick homes, wood frame homes, and mobile homes are at greater risk of earthquake damage)
- Whether your home was designed to withstand earthquakes
- What’s underneath your home (for example, homes on sandy soils are at greater risk than homes on clay or rock)
- The slope of the land your home sits on (hillside homes are at greater risk)
- Annual rainfall (rain combined with earthquakes can make land less stable)
- How much your home is worth
- How much your home’s contents are worth
- The quality of your home’s finishes (nicer finishes cost more to fix)
- How much you’d pay for earthquake insurance and how much coverage it’d provide
- How well-funded and financially stable the insurance provider you’re considering is
Seismic retrofitting is also important if your home has a living space over a garage, an older chimney, or a brick or stone fireplace.
For general information, start by selecting your state from this USGS page. The best way to get an accurate understanding of your home’s specific risks is to hire a geologist or engineer to conduct a site study of your property.
You can’t buy a policy right after an earthquake, and even if you could, it wouldn’t protect you against any damage you’d already experienced. Insurers typically won’t start coverage immediately after you purchase a policy, and they won’t sell you a policy until one to two months after the last earthquake.
How much does earthquake insurance cost?
In California, the average earthquake policyholder in 2021 paid $799 for a California Earthquake Authority (CEA) policy and $847 for a non-CEA policy, according to the CEA’s 2021 annual report.
A CEA policyholder paid $1.48 per $1,000 of insurance, and a non-CEA policyholder paid $2.02 per $1,000. At those rates, a $799 premium for a CEA policy would provide about $540,000 of coverage.
Earthquake insurance tends to be more expensive than homeowners insurance for the amount of coverage provided because insurers have a smaller pool of customers sharing the risk. Those who purchase earthquake insurance are the ones most likely to experience losses. As a result, insurers know they’ll have to pay out lots of claims after an earthquake.
Factors that determine your earthquake premium
Insurers consider these factors when determining your earthquake insurance premium:
- Your location’s earthquake risk
- Your home’s age
- Your home’s construction type
- The cost to rebuild your home
- The type and amount of personal property coverage you buy
Make sure to shop around for coverage. You can get insurance quotes for the same or similar coverage and see how each option compares. The more home equity you have, the more you stand to lose in an earthquake. That said, you’ll still be responsible for your mortgage even if an earthquake makes your home uninhabitable.
No matter where in the United States you live, it’s worth checking USGS maps to get a general idea of your earthquake risk. If you’re uncomfortable with the risk, look into an earthquake insurance endorsement or stand-alone policy. This will ensure you have the resources to repair or rebuild your home, replace damaged possessions, and live somewhere else if your home gets hit.
The Credible marketplace, which includes insurance services by Young Alfred, makes it easy to find a carrier and policy that’s right for you.
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Disclaimer: All insurance-related services are offered through Young Alfred.
About the author
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.