Will you be safe if the ground stops shaking?
This is a problem that not enough house owners consider, even in earthquake-prone areas. According to the California Earthquake Authority, the largest company in earthquake insurance, only 10% of California property owners are protected against earthquake damage.
However, Californians don’t have to think about purchasing protection. Earthquakes can happen anywhere, anytime. Consider the New Madrid seismic area in Missouri, the magnitude 7.3 earthquake in Charleston, South Carolina, in 1886, or the increase in earthquakes in Oklahoma as a result of commercial wastewater being injected underground.
Earthquakes can cause costly and even catastrophic damage to your home. However, earthquake insurance plans are often expensive and property owners may choose to take the risk of losing their protection in order to save money.
How can you determine if earthquake insurance is right to you? Let’s take a look at this type of insurance protection and decide if it is worth buying.
What is Earthquake Insurance?
Earthquake insurance provides protection for your home in case of damage from an earthquake. This insurance is not the same as basic renters or house owners insurance.
If you don’t have earthquake insurance and an earthquake damages your home, you will most likely end up having to pay out of pocket for any repairs. A Natural Threat Report may be provided by the seller if your commercial or residential property is at risk of earthquakes. Most basic property owners insurance policies do not cover earthquake damage.
What does Earthquake insurance cover?
Your policy will determine exactly what your earthquake insurance covers. A normal earthquake insurance policy generally consists of three parts:
- You can get house protection to help you pay for repairs or restorations.
- Personal effects insurance, which helps you to pay for the replacement of damaged products like televisions or furnishings.
- Loss of Use Protection, which covers your short-term, additional living expenses if your house is being repaired.
Your insurance may include (or offer as an optional rider), building regulations upgrade coverage. This means that your insurance will pay for additional expenses if your home is damaged or not certified according to current building regulations.
Ask your insurance company what types of riders they offer for extra protection. You can buy special protection for masonry veneer houses to protect your insurance from damage.
Are All Earthquake Destruction Protections In Place?
All sorts of issues can be triggered by earthquakes, which raises the question: What insurance coverage begins after an earthquake?
Imagine that an earthquake causes a pipe in your house to burst and results in significant water damage. Is your earthquake insurance covered? Flood insurance Routine property owner insurance
In such a case, your homeowners insurance would likely pay for the repair.
Your flood insurance would provide protection if your home were to be inundated by water from an external source.
Similar to the previous example, basic property owners insurance is likely to be the best option if your house experiences an earthquake that causes a fire.
An earthquake could cause damage to your vehicle. A detailed car and truck insurance policy would pay for repairs.
Bottom line is that earthquake insurance doesn’t cover all earthquake-related damage. Most cases, insurance policies would cover repairs or replacements of damaged residential or commercial properties.
What is the cost of Earthquake insurance?
It’s impossible to navigate it: earthquake insurance is expensive, and the more likely you are that you will need it, the higher the cost.
The cost of your policy depends on the amount of coverage you purchase, your deductible, and other aspects that are connected to your house, such as its age and location in relation to known faults.
Annual earthquake insurance premiums may vary between $800 and $5,000 per year. Policy deductibles are often 10% to 20% of your coverage limit.
Your deductible is the amount you will have to pay out of pocket before your insurance begins. California is home to many destructive earthquakes. This can cause homeowners to question whether it’s worth purchasing insurance.
Consider, for example, that you have earthquake insurance that covers $500,000. You’ll be responsible for $100,000 of repairs if your policy has a 20%deductible. You’ll be questioning the value of your $1,000-$2,000 annual premium if your home sustains less than $100,000 damage from an earthquake.
What is the best way to get earthquake insurance?
According to the U.S. Geological Study, (USGS), you should consider these elements when deciding whether earthquake insurance is right for you.
- Distance from active faults
- Frequency of earthquakes at your location
- How long has it been since the last earthquake?
- Your house’s construction and design type, design, products used and quality
- It doesn’t matter if your home was built with earthquake-preparation in mind
- Your house’s type of land is determined by the soil type and the slope.
- The amount of rain that falls each year
- Your house’s value and its contents
- Cost to guarantee the house
Although it may seem like there are a lot of things to consider, the truth is that there are only three main concerns.
- What is the likelihood of an earthquake?
- Is it possible that your home would be damaged by an earthquake?
- What if you had the money to repair your home after an earthquake?
This last concern is crucial. Despite the fact that the vast majority of the 55 earthquakes that occur each day around the world cause little or no damage, the big one can cause severe damage to your home.
This map by USGS will help you to understand how often destructive earthquakes occur in your area.
Earthquake Insurance Rates By City in California
The cost of protecting a single-family house can range from $2.50 to $5.50 for every thousand dollars (or $1,248 – $2,744 per year for $500,000 protection). Your premiums will increase if your property is closer to a California geological fault. This means that you are more likely to sustain earthquake damage to your property. California homeowners will need earthquake insurance to ensure that their homes are fully protected from damage caused by earthquakes.
Citizens living in Los Angeles’ Echo Park, Silver Lake, and El Sereno had a tendency to pay lower premiums for earthquake protection. For the same protection, Mar Vista, Culver city and West LA would typically have to pay higher premiums. The average cost of protection was $3.70 per 1,000 dollars (that’s $2960 annually for $800,000.) Prices can vary from $3.50 to $4 per thousand. The county has a 75% chance of experiencing an earthquake of magnitude 7.0+ within the next three years, thanks to the San Andreas fault and other smaller active faults.
In San Diego, the cost of earthquake protection ranges from $2.90 to 3.10 per thousand dollars. The annual premium for $575,000 worth of protection is $1,725. This is the average house rate in San Diego. According to the California Earthquake Authority, there is a 75% chance of the city experiencing a magnitude 7.0+ earthquake within the next 30 years. This includes the Rose Canyon, Elsinore, and San Jacinto geological faults. Los Angeles is susceptible to a major earthquake, but earthquake insurance rates in Los Angeles are lower than San Diego.
A single-family home in San Francisco that is protected against earthquakes could cost $4.40 to $4.40 per 1,000 dollars. While the Objective location is the most affordable, Nob Hill residents tend to have higher rates. Rates might be as low as $6,000 per year for protection of a $1.6 million house. The U.S. Geological Study estimates that there is a 98% chance of an earthquake with the San Andreas or Hayward faults passing through the Bay Location.
What is the Average Earthquake Insurance Cost?
For a single California household, the average earthquake insurance provider offered protection of $0.60 to $15 per 1,000 dollars. The average annual premium would range from $300 to $7,000 for coverage limits of $500,000 and above. This highlights the importance of getting quotes. Below is a chart that ranks businesses based on their average protection cost per thousand dollars. The most affordable business are listed first. Your home’s characteristics, such as its structure, number of stories, and year built, will impact the quote you receive. The chart does not include providers such as Allstate, State Farm, or USAA. They describe the California Earthquake Authority to help determine rates.
Opportunity Underwriters Exchange and Cincinnati Insurance Co. had the lowest earthquake insurance rates. Rates ranged from $0.60 to $1 per $1,000 of coverage. Aegis Security and American Modern were the three businesses that charged the highest rates. Pacific Specialized was the third. These insurance companies estimated rates that were seven to fifteen times more expensive than their most affordable counterparts. These higher-priced providers had rates that were fairly constant, regardless of whether the property owner lived in a low or high-risk area for tremblings.
To create the tables and charts, we evaluated earthquake premiums that were sent to the California Department of Insurance by insurance providers. Real rate samples from 33 providers were sent to 52 businesses. Twenty-one of the providers were excluded due to not offering real rates, referencing the California Earthquake Authority for rate estimations or being closely associated with businesses that offered the same rates. The chart below shows 31 of these providers.
For illustration purposes, all rates are listed per thousand dollars of protection. For an approximate rate, multiply the amount of protection required by 1,000. If you need $800,000. That would be $800,000. Your home’s location and the type of your home will determine how much you end up paying in premium and quote.
Many Questions about Earthquake Insurance
I am a renter. Do I Need Earthquake Insurance
You don’t have to own the property, but that doesn’t mean you can’t guarantee what you have.
The products inside your home can move and be damaged by strong earthquakes. For example, plates can fall out of cabinets and televisions and computer systems can be thrown to the ground. You may need additional funds to cover short-term living arrangements if your lease is not up to scratch after the earthquake has passed.
Renters earthquake insurance will help you cover expenses for returning to your normal life after an earthquake. These policies are often affordable. Renters in California might only pay $35 per year for a policy.
Where can I purchase earthquake insurance?
Depending on how your state deals with these types of policies, and who uses them, it will determine where you purchase earthquake insurance.
To find out if your house owners have these types of policies, call your insurance provider and connect to your state department of insurance.
I Just Survived my First Earthquake. Do I have the right to purchase protection now?
According to the National Association of Insurance Commissioners (NAIC), many insurance companies wait for a certain amount of time after an earthquake occurs, usually 30–60 days before they begin composing new policies.
Are there any discounts available for earthquake insurance?
If your home has been retrofitted to withstand earthquake shaking, you might be eligible for a premium discount on your earthquake insurance.
California’s CEA offers a 25% discount for older homes that have undergone a seismic retrofit.
Is there an earthquake insurance for my automobile?
Your earthquake insurance and your property owners insurance will not provide protection for your vehicles and trucks in the event of an earthquake.
You will need to purchase extensive vehicle insurance to protect your automobile against earthquake damage. This optional addition can be added to your vehicle insurance coverage. It covers damage to your vehicle that is not caused by an accident.
I live on the East Coast. Do I need earthquake insurance?
Although the chances of a serious earthquake affecting the East Coast are lower than those on the West Coasts, they can still happen.
Insurance is usually more affordable because of the lower likelihood of major earthquakes in these areas. The Insurance Info Institute estimates that protection on the east coast could cost less than 50c per $1,000.