Earthquake Insurance And Utility Bills: Understanding The Distinction

Earthquake insurance is an optional coverage that provides protection against damage caused by earthquakes to your home and property. It is not included in standard homeowners or renters insurance policies. The cost of earthquake insurance varies depending on factors such as the location of the home, the age of the home, the number of stories in the home, and the rebuilding cost. In California, the average cost of earthquake insurance is $738 annually. Earthquake insurance is not considered a utility bill.

Earthquake insurance coverage

Earthquake insurance is an optional coverage that provides protection against the damage that an earthquake can cause to your home and property. This type of insurance is separate from standard homeowners or renters insurance.

In general, an earthquake insurance policy consists of the following parts:

• Dwelling coverage: This helps you pay to repair or rebuild your home after earthquake damage.
• Personal property coverage: This helps you pay for replacements if you lose personal property during an earthquake, such as damaged personal items like your TV or furniture.
• Other structures coverage: This covers other structures on your property, like a shed, and can help pay for repairs after earthquake damage.
• Additional living expenses coverage: This covers the costs of living somewhere else while your home is being repaired after earthquake damage.
• Building code upgrade coverage: This covers the extra expenses of having to rebuild your home at an increased cost because the original structure isn’t compliant with current building codes.

Earthquake insurance doesn’t cover every peril. While the details of your unique earthquake insurance policy may vary, here are some issues that are usually not covered:

• Fire (this may be covered by your homeowners, renters, or condo insurance)
• Vehicle damage (this may be covered by your auto insurance policy if it includes comprehensive insurance)
• Floods (you need separate flood insurance for this damage)
• Sinkholes and other earth movement from non-seismic activity
• Water supply systems
• Swimming pools and hot tubs
• Masonry, such as the brick, stone, or rock used for your home’s veneer
• Pre-existing damage
• Tidal waves or tsunamis

The cost of earthquake insurance varies depending on several factors, including:

• The age of your home
• The number of stories in your house
• The rebuilding cost of your home
• The deductibles and coverage limits you choose
• The soil type on your property
• The building materials used in your home
• Your home’s proximity to fault lines and seismic activity

In general, earthquake insurance is more expensive if you live in an area that is at high risk of earthquakes. The average cost of earthquake insurance is about $850 per year, but rates can fall anywhere from $800 to $5,000 per year, and policy deductibles can be as high as 10% to 25% of the coverage limit.

Cost of earthquake insurance

The cost of earthquake insurance varies depending on several factors, including the location and value of your home, the risk of earthquakes in your area, and the age and construction of your home.

In general, earthquake insurance is more expensive in areas located near fault lines that are at higher risk for quakes. For example, in California, the average cost of earthquake insurance is $739 per year, but rates can range from $850 per year to over $2,000 per year, depending on the amount of coverage and other factors. The cost of earthquake insurance in other states, such as Nevada and Oregon, is lower, with rates starting at $300 and $200 per year, respectively.

The amount of coverage you choose will also affect the cost of earthquake insurance. The more coverage you have, the higher the premium. In California, for example, earthquake insurance costs an average of $3.54 for every $1,000 of insurance coverage. This means that insuring a home with a replacement cost of $600,000 would cost $2,124 in annual premiums.

Other factors that can affect the cost of earthquake insurance include the age of your home, the number of stories, and the type of foundation and building materials used. Older homes that are not built to modern seismic codes or do not have earthquake-proof structural features may cost more to insure. Additionally, taller homes and those with slab foundations are more prone to earthquake damage and may have higher insurance costs.

To get an accurate estimate of the cost of earthquake insurance for your specific situation, you can use online calculators or compare quotes from multiple insurance companies.

Earthquake insurance deductibles

Some policies have separate deductibles for different parts of the policy, such as dwelling and personal property. In these cases, you would pay a deductible for each part of the policy that you make a claim under. However, there is typically no deductible for temporary living expenses.

The high deductibles on earthquake insurance policies mean that many people will not receive a payout after an earthquake, as the damage may not exceed their deductible. For this reason, it is important to carefully weigh the cost of premiums against the likelihood and potential cost of earthquake damage.

How to get earthquake insurance

Earthquake insurance is an optional coverage that provides protection against damage caused by earthquakes to your home and property. This type of insurance is separate from standard homeowners or renters insurance, which don't usually cover earthquake damage.

Step 1: Assess Your Risk

Determine the likelihood of an earthquake occurring in your area and the potential damage it could cause to your home. Consider factors such as your proximity to fault lines, the age and construction type of your home, and whether you can afford to repair or rebuild your home without insurance.

Step 2: Contact Your Current Insurance Provider

If you already have homeowners or renters insurance, reach out to your insurance company to inquire about adding earthquake coverage as an endorsement to your existing policy. They may offer earthquake insurance as a standalone policy or through a partnership with a specialised provider.

Step 3: Explore Other Options

If your current insurer doesn't offer earthquake coverage, you may need to shop around. Contact your state's Department of Insurance to find licensed earthquake insurers in your area, or consider reaching out to independent insurance agents who work with multiple companies. You can also look into "surplus lines," which are companies that provide coverage for risks that other insurers won't cover.

Step 4: Compare Policies and Prices

When considering earthquake insurance policies, pay attention to the coverage limits, deductibles, and exclusions. Compare the cost of the policy against the potential payout, taking into account factors such as your home's location, age, rebuilding cost, and your chosen deductible and coverage limits.

Step 5: Make an Informed Decision

Weigh the costs and benefits of purchasing earthquake insurance based on your risk assessment and financial situation. Remember that earthquake insurance can be expensive, and you may need to balance the premiums and deductibles with the potential payout in the event of a claim.

Is earthquake insurance worth it?

Earthquake insurance is an optional, additional insurance coverage that provides protection against damage caused by earthquakes to your home and property. This type of insurance is separate from standard homeowners or renters insurance, which does not typically cover earthquake damage.

Whether or not earthquake insurance is worth it depends on several factors. Here are some pros and cons to help you decide:

Pros:

• It covers the cost of rebuilding your home and replacing your belongings if they are damaged or destroyed by an earthquake.
• It covers additional living expenses such as hotel stays, restaurant meals, and pet boarding if you need to live elsewhere while your home is being repaired.
• It provides peace of mind, especially if you live in an area prone to earthquakes.

Cons:

• It can be expensive, with annual premiums ranging from $800 to $5,000 or more, depending on various factors.
• It often has high deductibles, which can range from 5% to 25% of your coverage limit. This means you could end up paying a significant amount out of pocket before your insurance coverage kicks in.
• The likelihood of needing it is relatively low, especially if you don't live in an area prone to earthquakes.

Ultimately, the decision to purchase earthquake insurance depends on your individual circumstances and risk tolerance. If you live in an area with a high risk of earthquakes and couldn't afford to repair or rebuild your home without insurance, then it is likely worth considering. However, if you live in an area with a low risk of earthquakes and/or could comfortably cover the cost of repairs or rebuilding, then it may not be necessary.

Frequently asked questions