Homeowners and business insurance policies do not cover earthquake damage, which is why some people buy earthquake insurance policies. When you shop for an earthquake policy, remember to consider the deductible. The deductible is the amount you’ll pay for a claim out of pocket before the policy kicks in.
What does an earthquake policy cover? An earthquake policy will pay for some of your financial losses after an earthquake. Remember, though, that earthquake insurance typically only covers direct damage to the property from an earthquake’s shakes. Indirect damage, such as fire and water damage from burst natural gas or water pipes, is covered under a homeowners policy.
Are earthquake deductibles higher than a typical homeowners insurance deductible? Yes. The deductible for earthquake insurance is usually 10%–20 % of your coverage limit. For example, if you insured your home for $200,000, a 10% deductible would be $20,000, which you will have to pay.
Remember, a larger deductible means you'll have to pay more for losses. If your deductible is high enough, the damage may be less than the amount of your deductible.
Even if you don't think the damage to your home is more than your deductible, let your insurance company know if an earthquake damages your home. A qualified professional should inspect your home for hidden structural and cosmetic damage.
Do earthquake insurance policies have multiple deductibles? An earthquake policy may have separate deductibles. Your home, belongings, and outside structures, like detached garages and fences, may all have individual deductibles. Always check with your insurance agent or insurance company customer service representative to learn how the deductibles work on your earthquake coverage.
Is the deductible considered an uninsured loss? Yes. You are entitled to federal disaster loans to help cover uninsured losses. You can learn more about that here.
How many events will be covered under one deductible? Typically, all earthquake events in a 72-hour (three-day) period are considered one event, with one claim and one set of deductibles.
Damage caused by aftershocks more than 72 hours after the first earthquake could mean you will have a second claim with a second set of deductibles. The 72-hour period can vary by insurance policy. Discuss this with your insurance agent or insurance company's customer service representative.
Learn more about earthquake insurance and deductibles in A Consumer’s Guide to Earthquake Insurance.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.
