Earthquake Insurance: Should You Get It?


 

Natural disasters strike without warning, and among the most unpredictable and devastating are earthquakes. In a matter of seconds, an earthquake can level buildings, destroy infrastructure, and cause financial ruin. Yet, earthquake insurance remains one of the most overlooked forms of property protection. So the question arises: Should you get earthquake insurance? This comprehensive guide breaks down what earthquake insurance is, what it covers, who needs it, and how to determine if it’s worth it for you.

What Is Earthquake Insurance?

Earthquake insurance is a specialized policy that covers damage and losses directly resulting from seismic activity. Unlike standard homeowners, renters, or commercial property insurance, which typically excludes earthquake damage, this coverage is specifically designed to protect your property, belongings, and rebuilding costs after a quake.

It is not automatically included in your homeowners policy and must be purchased separately or as an endorsement.

What Does Earthquake Insurance Cover?

Earthquake insurance policies typically include the following types of coverage:

1. Dwelling Coverage

Pays for repairs or rebuilding of your home or building if it's damaged by an earthquake. This includes:

  • Foundation damage

  • Structural collapse

  • Cracked walls and ceilings

  • Damage to attached garages

2. Personal Property Coverage

Covers loss or damage to personal belongings such as:

  • Furniture

  • Electronics

  • Appliances

  • Clothing

Note: Most policies exclude fragile items like glassware, china, or artwork unless specifically endorsed.

3. Loss of Use / Additional Living Expenses

If your home becomes uninhabitable due to quake damage, this covers:

  • Temporary housing

  • Meals

  • Transportation

  • Storage costs

4. Other Structures Coverage

Includes fences, detached garages, and sheds, although limits may apply.

5. Debris Removal and Emergency Repairs

Essential services like removing rubble, boarding windows, or stabilizing structures may also be included in coverage.

What Earthquake Insurance Does NOT Cover

It’s important to understand the limitations and exclusions of earthquake insurance:

  • Fire damage (usually covered by homeowners insurance)

  • Floods or tsunamis caused by earthquakes (requires flood insurance)

  • Vehicle damage (covered under auto insurance with comprehensive coverage)

  • Pre-existing damage

  • Landscaping and land movement costs, such as sinkholes or erosion

Always review the fine print of your policy to understand exactly what's included.

Where Is Earthquake Insurance Most Important?

Earthquake risk isn’t limited to California. Other high-risk areas in the U.S. include:

  • Pacific Northwest (Oregon, Washington)

  • Alaska (experiences the most quakes annually)

  • Missouri and Tennessee (New Madrid Seismic Zone)

  • South Carolina (Charleston Seismic Zone)

  • Utah and Nevada

Even if you live outside of a recognized fault line zone, secondary shocks, ground movement, and indirect impacts can still affect your property.

Do You Really Need Earthquake Insurance?

Consider These Factors:

1. Location

If you're in or near an earthquake-prone region, the risk is real. Use FEMA’s Earthquake Hazard Maps to determine seismic activity in your area.

2. Construction Type

Homes built on slopes, with crawlspaces, or with brick or stone masonry are more vulnerable to quake damage.

3. Financial Exposure

Ask yourself: Can I afford to rebuild my home without insurance? If not, earthquake insurance could be essential.

4. Mortgage Requirements

While most lenders don’t require earthquake insurance, some in high-risk zones do. It may also be mandated by HOAs or condo associations.

Cost of Earthquake Insurance

The cost of earthquake insurance varies widely based on:

  • Location and proximity to fault lines

  • Construction materials and building age

  • Home value and coverage amount

  • Deductibles (usually 10%–25% of the coverage limit)

On average, premiums can range from $100 to over $3,000 annually, with higher costs in high-risk areas like California or Alaska.

Understanding Earthquake Insurance Deductibles

Unlike standard homeowners insurance, earthquake policies have percentage-based deductibles. This means:

  • A 10% deductible on a $400,000 home equals $40,000 out-of-pocket before coverage kicks in.

  • Some policies have separate deductibles for dwelling, personal property, and loss of use.

This makes earthquake insurance a high-deductible policy, best suited for protecting against catastrophic loss, not minor damage.

Is Earthquake Insurance Worth It?

Pros:

  • Peace of mind in high-risk zones

  • Protection for your most valuable asset—your home

  • Coverage for personal belongings and additional living expenses

  • May be required by lenders or associations

Cons:

  • High deductibles can limit usability

  • Premiums can be expensive in risk-prone areas

  • Limited coverage for land damage or certain personal items

Who Should Definitely Consider It:

  • Homeowners in California, Oregon, Alaska, Missouri, and similar high-risk states

  • Owners of older or unreinforced masonry buildings

  • Those who cannot afford to rebuild or relocate out-of-pocket

Tips for Buying Earthquake Insurance

  1. Shop Around – Compare policies from different insurers, including state-sponsored programs like the California Earthquake Authority (CEA).

  2. Bundle Policies – Some insurers offer discounts when you combine with home or auto insurance.

  3. Understand the Deductibles – Know what you’re responsible for and how it affects coverage.

  4. Review Your Policy Regularly – Especially after home improvements or changes in property value.

  5. Consider Retrofits – Strengthening your home may lower your premium and risk of damage.

Conclusion: Is Earthquake Insurance Right for You?

If you live in an earthquake-prone area, skipping this coverage could lead to financial devastation. While the premiums and deductibles may seem high, earthquake insurance provides crucial protection against total loss. Evaluate your location, home structure, financial capacity, and risk tolerance to decide whether it’s worth the investment.


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