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Earthquake insurance: What it costs and what it covers

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    Earthquakes occur in the United States more frequently than you might think, with some areas more prone to tremors than others. But what does it mean if the unexpected happens and your property gets damaged in a quake? Does your homeowners insurance cover earthquakes and their aftereffects?

    The shortest answer here is no. That said, there may be some exceptions and it’s important to understand the terms of your policy, especially if you live in an area susceptible to seismic activity. But, in most cases, you’ll likely need to purchase additional insurance for earthquakes to better protect your property in the event of a quake.

    What is earthquake insurance?

    Earthquake insurance is a specialty product for homeowners looking to insure their properties in the event of earthquake-related damage or disruption. It’s designed to provide a level of coverage that standard homeowners insurance typically doesn’t offer. But just how likely is your home to be affected by an earthquake?

    Risk of earthquake damage

    While risk may vary significantly based on location, approximately half the population of the United States is deemed to be at some level of exposure to earthquakes, according to the U.S. Geological Survey. Of the total population, 5-10% live in areas with a high risk of damaging shaking within a 50-year timeframe. At the state level, California experiences the highest number of tremors strong enough to cause property damage. Other states with a high risk for earthquakes include Washington, Utah, Tennessee.

    What does earthquake insurance cover?

    Scenarios that earthquake insurance might cover (that a homeowners policy typically doesn’t) include:

    • Earthquake-related damage to property and personal belongings.
    • Emergency repairs incurred as a result of an earthquake.
    • Loss-of-use compensation for temporary living expenses related to not being able to use your property as you normally would.
    • Additional fees that may be levied on you by a condo or homeowners association in the aftermath of an earthquake.
    • The cost of rebuilding your house to code in the event of earthquake damage.

    In each instance, it’s important to carefully review the terms of the policy to understand exactly what is covered. What limitations or exclusions may apply? These could, for example, include coverage limits on what your insurance company will pay in the event of property damage. Perhaps structural items such as your roof and load-bearing walls are covered, but non-structural damage to interior walls may be subject to exclusion or limitations.

    What doesn’t earthquake insurance cover?

    As mentioned above, there are various scenarios that earthquake insurance typically doesn’t cover. Importantly, this includes flood damage (which requires separate flood insurance) and any pre-existing damage to your home.

    Not all earth-moving events are necessarily protected by earthquake coverage either. Property damage related to landslides or sinkholes, for instance, may not be covered. Damage to outdoor structures, such as sheds, swimming pools and even driveways, might also fall outside of your policy’s terms.

    Earthquake insurance may not cover damage to high-value or fragile possessions, such as jewelry or breakables. In this case, you may wish to consider standalone specialty coverage. It may be possible to add specialty protection in the form of a rider, or endorsement, to your main policy.

    As with any contractual agreement, details matter and it’s important to understand the exact terms of your policy. Consider consulting with an insurance professional to ensure you have the coverage in place that’s right for you.

    What might your homeowners insurance include?

    While homeowners insurance generally doesn’t provide for earthquakes, there are instances where your standard policy may cover some types of earthquake-related damage.

    For example, if an earthquake triggers a fire that damages your property, this might be covered. Water damage caused by broken pipes inside the home could also fall under your policy. Keep in mind that policies vary among providers, and other factors may come into play when determining an insurance claim.

    What does earthquake insurance cost?

    Earthquake insurance premiums can vary widely, depending on where you live and how close your property is to a fault line. Premiums tend to run significantly higher in states that are prone to earthquakes, such as California, compared to states like Maine where the risk of earthquake damage is statistically low.

    Other factors that may influence your premiums for earthquake coverage include the type of property you’re insuring. For instance, single-family homes will typically be assessed differently to condominiums or mobile homes.

    Earthquake coverage and deductibles

    When assessing the cost of earthquake insurance, it’s important to understand how your deductible — the amount you pay before your insurance coverage kicks in — might work in the event of a claim. Deductibles for earthquake coverage tend to be higher than those required in standard homeowners insurance.

    Do I need earthquake insurance?

    While earthquake insurance is not mandatory, there are certain considerations when deciding whether to take out earthquake coverage, such as:

    • Your property’s proximity to active fault lines.
    • The seismic record, including the time since the last recorded activity.
    • Property structure, age of the building and its type of foundation.
    • The soil conditions of the land on which your property sits.
    • Any earthquake retrofitting that your property already has.

    You might also want to ask how financially difficult a situation you might be in if your house incurs significant earthquake damage without insurance. Can you afford the full cost of rebuilding your home on your own? If the answer is no, earthquake insurance may be something to think about further.

    To determine whether earthquake insurance is right for you, consider speaking with an insurance agent to review all options. Bear in mind that most insurers won’t accept new policy applications from an affected area for a predetermined period after an earthquake.

    Preparing your property for earthquakes

    If you live in an area prone to earthquakes, you may consider retrofitting your property to better withstand the effects of a tremor. Your state may offer assistance for this work, which typically involves strengthening a property’s foundations through a combination of construction techniques.

    In summary

    If you want to insure your property against damage from earthquakes, you’ll typically need to purchase standalone earthquake insurance as a supplement to your standard homeowners policy. While earthquake coverage insures against many aspects of damage or disruption related to a quake, it doesn’t offer comprehensive protection and additional restrictions may apply.

    To determine whether insurance for earthquakes is right for you, speaking with an insurance professional, particularly someone with knowledge of your local area, may be a smart next step.

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