For California homeowners, a primary concern is the damage earthquakes can cause to their house and property. In fact, an earthquake occurs every three minutes in California. With the increase in seismic activity in the state, many people are wondering if their homeowner’s insurance will cover earthquake damage.
Here is what you need to know about homeowners insurance, what it can cover, and what you can do if an earthquake damages your home.
What is Homeowners Insurance?
Homeowners insurance is a type of property insurance that covers losses and damage to an individual’s house and the belongings in it. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
Because homes are so expensive to replace, most mortgage companies require that borrowers have a homeowners insurance policy. Which is why it’s essential to understand how it works. Normally, a standard homeowners insurance policy costs anywhere from $300 to $1000 per year.
What Does it Normally Cover?
Most homeowners insurance policies cover the dwelling, or the house itself, for a set amount of time. They also cover other structures on the property, like sheds or detached garages. The policy will list how much coverage there is for each type of structure.
Homeowner’s insurance typically covers personal belongings inside the home as well, but there may be limits on certain items like jewelry, furs, or silverware. Some policies require that these items be listed separately to receive full coverage.
Basic homeowners insurance policies also provide liability coverage in case someone is injured while on your property. This can include medical expenses and legal fees if you are sued. Other things it may cover include:
- Additional living expenses if you have to move out of your home while it is being repaired
- Damage caused by vehicles, aircraft, or explosions
- Fire or lightning
- Smoke damage
- Windstorm or hail
Does Homeowners Insurance Cover Earthquakes?
Homeowner’s insurance policies exclude damage caused by earthquakes. This means that if your house is damaged or destroyed in an earthquake, your standard homeowner’s policy will not pay to repair or replace it. In order to be covered for earthquake damage, you must purchase a separate earthquake insurance policy.
What Should You Do If Your Home is Damaged in an Earthquake?
If your home is damaged in an earthquake, the first thing to do is to get emergency instructions from a trusted source. Next take steps to prevent further damage. You should call your insurance company because while earthquakes are not normally covered by insurance, it’s important to check first. If your home is not covered, you should start making repairs as soon as possible.
If you have earthquake insurance, your policy will likely have a deductible. This is the amount of money you will have to pay out-of-pocket before your insurance company starts to pay for repairs. The higher your deductible, the lower your premium will be.
How Bethany Insurance Agency Can Help
At Bethany Insurance Agency, we understand that earthquake damage is a very real threat for California homeowners. That’s why we offer a chance to customize an insurance plan specific to your needs. We want you to be prepared for anything that comes your way. Contact us today to learn more about our insurance policies and how we can help you protect your home.
FAQs
According to NerdWallet, certain natural disasters such as earthquakes, floods, landslides and sinkholes are not covered under a standard home insurance policy. Flood and earthquake insurance are separate policies available for purchase, NerdWallet said.
Is an earthquake covered by home insurance? ›
In most homeowners policies, earth movement is an excluded type of loss for both dwelling/structures and personal property. To obtain earthquake-specific protection for your property and belongings, you will likely need to purchase a separate earthquake insurance policy.
Why are earthquakes not covered by insurance? ›
Did You Know? Standard homeowners' insurance does not cover damage resulting from land movement or landslides. Many insurance companies stopped insuring earthquakes in the 1990s after projections suggested that a major earthquake could potentially bankrupt them.
What is the average cost for earthquake insurance? ›
The typical annual cost of earthquake insurance in California is $3.54 per thousand dollars of coverage. The exact cost depends on the earthquake risk level in the policyholder's area, the type and amount of coverage they choose, their deductible percentage, and the construction of their home.
Is earthquake insurance worth it? ›
If you live near an active fault line, and earthquakes happen with relative frequency, it might be worth it to get earthquake insurance. Additionally, if there was an earthquake that caused significant damage in an area within the past few decades, it might be worth considering.
Does earthquake insurance cover foundation cracks? ›
Foundation damage and repair typically fall under the dwelling coverage portion of your insurance policy because the damage is to the structure of the home. Check out our Best Homeowners Insurance Companies of 2024 rating.
Does FEMA pay for earthquake damage? ›
FEMA offers various grants to assist individuals and households affected by disasters. While FEMA does not typically provide direct financial assistance for earthquake damage, it may offer grants to help homeowners or renters elevate their homes to reduce future earthquake risks.
What happens if your house is destroyed by an earthquake? ›
If your house gets damaged in an earthquake, you will have to pay for the repairs yourself if you don't have earthquake insurance. One exception is if an earthquake sparks a fire that burns your house. In that case, your home insurance policy should cover the fire-related damage since the policy covers fires.
How much is AAA earthquake insurance? ›
How much does earthquake insurance cost? AAA earthquake insurance is available to renters and homeowners in California. The average policy costs approximately $850 per year. Your total premium will depend on various factors, including the age and location of your home.
How do I claim earthquake insurance? ›
Report your claim: Contact your residential insurer as soon as possible to start your claim. Remember, all CEA policies offer coverage for emergency repairs. This allows policyholders to take immediate steps to secure their property and avoid further damage.
TOP THINGS TO CONSIDER
The deductible for earthquake insurance is usually 10%–20% of the coverage limit.
What percentage of people have earthquake insurance? ›
According to data collected by Aon, California has experienced 6 of the top 10 costliest earthquakes in U.S. history and yet only 10% of its residents have earthquake insurance. Similarly, only 11.3% of Washington's residents were covered in 2017.
Can you buy separate earthquake insurance? ›
CEA does not offer stand-alone policies.
You must have a residential property insurance policy with one of our providers in place in order to purchase a CEA earthquake policy – see the CEA participating residential insurance companies.
Why don't people buy earthquake insurance? ›
Some argue the high price of deductibles and premiums make earthquake insurance costly – and therefore not worth the money. To figure out if an earthquake insurance policy is worth it for you, start by establishing the potential risk of where you live.
Why insurers are reluctant to offer earthquake coverage in homeowners insurance policies? ›
While no insurer became insolvent, some came very close. To recover their financial strength and to be better prepared for the next earthquake, most insurers began to limit their exposure to earthquakes by writing fewer new homeowners insurance policies.
Does regular homeowners insurance cover earthquakes? ›
In California, your residential insurance policy doesn't cover your home or your belongings against earthquakes. If you don't have an earthquake insurance policy, you're not covered for earthquake damage or any additional costs needed to live elsewhere while your home is being repaired or rebuilt after a quake.
Does all risk insurance cover earthquake damage? ›
The most common types of perils excluded from "all risks" include earthquake, war, government seizure or destruction, wear and tear, infestation, pollution, nuclear hazard, and market loss.
What states have earthquake insurance? ›
In California, Oregon and Washington, residents can buy standalone earthquake policies from GeoVera or Arrowhead; the latter is an agency selling policies from multiple companies. If you live elsewhere and your current insurer doesn't offer coverage, you'll need to shop around.
What is an example of earthquake insurance? ›
For example, if your house is insured for $200,000 and an earthquake strikes causing $80,000 in damage, you have up to 5% ($10,000) in Emergency Repairs coverage to make your house safe to live in. Emergency Repairs provide coverage up to 5% of dwelling and 5% of the personal property limit.
