Earthquake insurance is a type of insurance policy specifically designed to protect homeowners and renters from the financial losses caused by earthquakes. Since standard homeowners or renters insurance don’t cover earthquake damage, this is a crucial add-on in earthquake-prone zones.
What does it cover?
- Dwelling Coverage (Homeowners):
- Rebuilding & Repairs: Covers the cost to repair or rebuild your home’s physical structure if damaged by an earthquake.
- Foundation Damage: Earthquake damage to foundations can be especially costly and is often covered.
- Personal Property Coverage (Homeowners and Renters):
- Belongings: Covers your possessions – furniture, appliances, electronics, etc. – if damaged or destroyed in an earthquake.
- Additional Living Expenses (ALE):
- Temporary Housing: If your home is uninhabitable due to earthquake damage, ALE helps pay for hotel stays, meals, and other costs while it’s being repaired.
Important Notes:
- Separate Policy: Earthquake insurance is typically purchased as either a separate policy or as an add-on (endorsement) to your existing homeowners or renters insurance.
- Deductibles: Earthquake policies often have high deductibles, often a percentage of your dwelling’s insured value (like 10-15%) rather than a fixed dollar amount.
- Availability: In high-risk areas like California, some private insurers offer earthquake insurance, and there’s also the option of the California Earthquake Authority (CEA), a publicly managed program.
Why consider earthquake insurance?
- High Risk = High Cost: Earthquakes can cause devastating and extremely expensive damage. Without insurance, the cost of rebuilding can be financially crippling.
- Peace of mind: Especially in earthquake-prone areas, having this coverage gives you financial protection if disaster strikes.