How to Know If You Should Get Earthquake Insurance

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As a homeowner, it’s essential to have homeowners insurance to protect you, your household, and your personal belongings in case of an emergency. Though this type of insurance plan is incredibly common and features a wide variety of coverage options, homeowners insurance typically does not reimburse household and property damages in the event of specific catastrophic natural disasters, such as earthquakes.
If you live in an area prone to earthquakes or tremors, it’s certainly in your best interest to research your earthquake insurance options, either as a homeowners insurance add-on or its own plan, to ensure that you are fully covered during the next one.

What is earthquake insurance?

As far as natural disasters go, earthquakes are truly volatile and can have an immense impact on their surroundings. They are unpredictable, cataclysmic, and can lead to additional issues such as landslides, flooding, and even tsunamis. The higher an earthquake scores on the Richter Scale, the more likely it is to cause buildings to collapse and lead to irreversible structural damage being done to properties.
If not handled correctly, earthquakes can also lead to gas leaks and explosions in both personal homes and public places. According to State Farm, even a tremor can result in catastrophic losses, making purchasing earthquake insurance essential to homeowners in high-risk areas.
Earthquake insurance covers damages made to your dwelling, personal property, and other essential home structures both during and in the aftermath of an earthquake or tremor. These policies typically also feature a “loss of use“ addendum, in which the insured are entitled to financial compensation for any time spent outside the home while repairs are being made (e.g. the cost of a hotel stay). It is important to note that earthquake insurance only covers damage to your home that is integral to its stability and overall safety.
Earthquake insurance does not cover damages made to:
  • Water supply systems
  • Landscaping/decorative items
  • Cars and other personal electronics
  • Personal property outside the dwelling
  • The 16 named perils covered by home insurance

Should you get earthquake insurance?

If you live in an area where earthquakes or tremors are commonplace, purchasing this insurance option will protect you from life-changing financial losses and reduce your stress in the event of an emergency.
In certain states, such as California, insurers are required to offer you earthquake insurance as an add-on to your homeowners insurance (and at least once every other year). This additional coverage has a higher deductible than most other insurance options, as earthquakes are deemed high-risk to most insurance companies, but having it can be the difference between being able to easily repair your home and replace your belongings and struggling to gather the funds to do so.
Before deciding if earthquake insurance is right for you, assess the risk in your particular neighborhood and state by extension. The United States Geological Survey advises you to look into your proximity to active earthquake faults, the type of building foundation used when constructing your home, and even smaller factors such an annual rainfall. According to their most recent survey, the following states are at the highest risk of shaking due to an earthquake or tremor (listed in alphabetical order):
  • Arkansas
  • California
  • Illinois
  • Missouri
  • Nevada
  • Oregon
  • South Carolina
  • Tennessee
  • Utah
  • Washington
While being at a higher risk for earthquakes does not necessarily require you to purchase this additional insurance policy, it is important to do your own reseach before asking your insurance representative about popular bundling options in your area. Their goal is to sell you on the product, but only you know if it is the right option for you and your family.

How much does earthquake insurance cost?

Earthquake insurance typically comes with a deductible that amounts to 15% of your home’s value. This does not factor in the cost of the premium (which varies due to your physical location, age of home, and the overall cost it would take to rebuild), any policy and special limits you may have, or any other special coverage add-ons you may be considering.
If you’re thinking about purchasing earthquake insurance but are unsure how it will impact you financially, you can compare insurance rates online to ensure you are getting the best price possible for your amount of desired coverage. Never allow your insurance premiums to put you in the red, as this can severely impact your current financial situation and financial future.

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