What should San Diego County residents know about Earthquake Insurance Policies and Risks, as well as Costs?
Quality Claims Management considers earthquake coverage to be catastrophic insurance. It is only necessary if there is a very large earthquake. You may be eligible depending on where you live and how much you have put into your home. Here’s what you need to know.
First, earthquake damage is not covered by most homeowners, mobile home owners and condominium renters, as well as most standard homeowners’, condo, and renter insurance policies. Like flood insurance, earthquake insurance must usually be purchased separately.
Fire insurance is included in most homeowners insurance policies. Your home insurance policy could cover a substantial amount of damage if your house is destroyed by an earthquake or burnt down.
Most of the damage that can result from earthquakes occurs after the ground stops shaking. Gas lines that have burst or begun leaking could catch fire and set your home ablaze. It is possible for your home to catch fire from an earthquake that has occurred miles away in San Diego County. It is possible that a power line has collapsed. The quake could have set fire to a home. Flames may have traveled miles through brush to reach your home.
Water damage is another important factor. Pipes can be broken by earthquakes. Even small quakes may crack pipes that carry water or sewer. This can flood your home and cause severe damage to floors, rugs, furniture, and even the structure.
Flood and fire damage should be included in your homeowner’s policy.
Landslides are another danger that can be caused by earthquakes. This coverage may or not be available to you. To ensure that you are covered for fires and landslides, make sure to review your homeowner’s insurance policy. Are you fully protected if your home burns down? Are you able to rebuild your home?
For more information about homeowner insurance, see our articles on homeowners insurance.
Where can you find Earthquake Insurance?
In California, insurers selling residential property insurance must offer earthquake coverage to policyholders. These California earthquake insurance policies are most often backed by and managed by the CEA, or California Earthquake Authority.
Although most earthquake insurance policies are sold through the state-run insurance pool only a handful of private companies sell earthquake coverage. Insurance companies have the option to become CEA-participating insurance companies and offer CEA’s residential earthquake policies. They can also manage the risk. Companies that have sold more than two-thirds residential property insurance in the state are CEA participants.
According to the CEA website the CEA homeowners policy was created to assist you in getting back into your home following an earthquake. The CEA homeowners policy includes:
Dwelling coverage – The coverage limit refers to the insured value of your house as stated in your companion homeowner policy.
* Personal Property Insurance – $5,000
* Additional Living Expense/Loss Of Use Coverage – $1,500
* You can choose between a 10% and 15% deductible for your Dwelling coverage. CEA’s increased limit options allow you to increase Personal Property coverage up to $100,000, or Additional Living Expense/Loss coverage up to $15,000.
Insurance for residential property includes coverage for homeowners and condominium owners as well as mobile home owners and renters.
Earthquake insurance does not cover smaller losses. You must have sufficient damage to exceed your deductible. Although deductibles generally amount to 10-15% of Coverage A limits, it can sometimes be confusing to calculate the exact deductible amount because there are many factors that are included in the equation.
How can your home withstand an earthquake? Do you need Earthquake insurance?
Where are you located in San Diego County?
What is underneath your house? (rock, sand or fill)
How is your home built? What code is it following and how does that affect your coverage?
How a residential structure reacts to an earthquake will depend on its age and construction type. The following rating factors were derived from engineering and scientific research.
Generally speaking, slab-built houses perform better than ones built on a foundation.
– Single-story homes are less susceptible to earthquake shaking than multistory houses.
– Masonry structures that are not reinforced are more vulnerable to damage than wood-frame construction.
– Older houses are less sturdy than others.
Your risk is affected by the type of home that you own. Multistory homes with a roof attached to the walls and walls to the foundation will fare better in earthquakes and windstorms than one-story homes that have the roof tied together. Houses with large openings like plate-glass windows and large garage doors fare better than houses without them.
You can also make your home more secure by taking certain construction measures. This can be a much better investment than purchasing earthquake insurance.
The Institute for Business and Home Safety offers a Fortified For Safer Living” Program that teaches building techniques that will help your home withstand natural disasters.
Additional California Earthquake Insurance Factors
There is no requirement for a Loss Letter
An insurer might require a “No known loss letter” for any requests to obtain earthquake insurance or add earthquake coverage to an existing policy. This type of letter letters confirms that there have been no losses or damages to the coverage requested.
DIC Policy
Insurance called DIC (Difference In Conditions) provides coverage that fills in specific gaps in standard insurance policies. This insurance allows for coverage to be tailored to cover specific exposures such as flood, earthquake, flood, and landslide. DIC coverage can be added to a basic insurance policy as an endorsement or by purchasing a separate policy.
Are you eligible for earthquake insurance? What amount of equity do you have in your home?
We view earthquake coverage as catastrophic insurance, as we have said before. It is only necessary if there is a very large earthquake. Insurance is more important if you have more equity in your home.
UnitedPolicyHolders is a non-profit that advocates for insurance consumers’ rights and educates people and businesses about fair treatment. It states that no more than 10% of your liquid assets should be at risk. Large earthquakes can cause damage to your home and your belongings. You may also lose up to 20% of your property.
We get many smaller quakes in San Diego on a daily basis. These are reminders that you should review your existing coverages to ensure that you are properly insured. Is your homeowner’s policy current? Is it affordable to repair your home according to current building codes? Are you covered for any new items you may have since you bought your first insurance policy?
It is more likely that pipes will burst or that fires start after smaller earthquakes. You should be covered under your homeowners policy in the event of either one. Make sure your policy is current and you have sufficient coverage. We found that many homeowners in San Diego were underinsured after the wildfires of 2003 and 2007.
Businesses should also review their policies to ensure they have EQSL – or Sprinkler Loss Coverage. Sprinklers leaking more often than a building collapsing is likely to cause damage.
