How Much Does Earthquake Insurance Cost?
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Earthquake coverage isn’t rolled into your standard homeowner’s insurance policy, so you have to add it on if you want protection against damage from tremors. Such an addendum to your policy usually covers structural damage, personal property loss, and off-site living expenses if needed during repairs. This type of coverage usually does not cover related damages from flooding, sinkholes, vehicle loss, or fire, although other parts of your homeowner’s may provide protections.
The cost of Earthquake insurance often ranges between $100 and $5,000 per year, though it varies to some degree according to the insurance provider. It is also variable according to other factors related to location and specifics about your home, as described below.
1. Cost varies by state
While every state in the nation has had an earthquake at some point, some states are considered more of a high risk area than others if they are prone to tremors. If you live in California, for instance, you’re no stranger to shaking ground, and earthquake insurance premiums cost more there than in Tennessee. The states with the highest earthquake insurance cost are Alaska, California, Oregon, and Washington.
2. Proximity to a fault line
Fault lines are fractures, or cracks, in the rock underneath the earth that are more prone for earthquakes to occur. Basically, an earthquake occurs when one side of the crack shifts and rubs against the other side. The angle and depth of such cracks influences how they are rated in severity and likelihood to create earthquakes.
While some states have a lot or bigger fault lines, increasing earthquake insurance premiums throughout the state, these fault lines exist all across America. Still, the closer you are to a fault line, the higher your cost will be for an earthquake policy.
3. Value of your home
As with your main homeowner’s policy and any other add-ons, such as flood insurance, the value of your home plays a role in cost of your earthquake insurance.
Naturally, a $2 million house will cost more to insure than a $50,000 one. Earthquake insurance companies must play the odds of how likely damage is to occur and how much they may have to pay on a claim with the off-setting cost of earthquake insurance premiums.
4. Construction materials
Remember the story of the three little pigs? After the wolf huffs and puffs, or the earth quakes, the brick house was the only one left standing. Similarly, strongly constructed homes are less prone to significant damage from tremors than ones made from less sturdy materials. Steel and iron are the strongest home building materials, while wood is considered far less durable than metal or even concrete.
Some states, such as California, offer discounts for homes that are braced to the foundation, known as a seismic retrofit. There may even be grants available to pay for this type of structural reinforcement. Your local Department of Housing and Community Development is likely to know if such assistance is available and applicable to your situation.
Warning: While those living along fault lines or at higher risk for tremors are not required to carry earthquake insurance in addition to standard homeowner’s insurance, it could mean the difference between financially surviving the “Big One” and bankruptcy if major earthquake damage occurs.
Weigh your options carefully before making the decision to pass on earthquake insurance, and ask your insurance agent about options to build your own coverage with different deductibles for the structure and personal possessions.