Drop, Cover and Hold On: Earthquake Insurance Basics
Earthquakes strike often and without warning in California, which has an average of 10,000 seismic events per year. Whether you live in San Diego or Eureka, don’t be caught off guard by the next temblor, because in California, it’s not a matter of if an earthquake strikes, but when and how large it will be.
You can help keep your family and pets safe when the next big quake hits by creating an earthquake preparedness list that includes stocking an earthquake kit, practicing earthquake drills and deciding on an emergency family meeting place. But how can you protect your property?
Your homeowners insurance won’t cover you
Most homeowners, condominium and renters insurance policies do not cover damage from an earthquake. Similar to flood insurance, earthquake insurance must be purchased separately in California. Without it, you’ll have to pay out of pocket to replace broken possessions and repair any damage to, or even rebuild your home.
What earthquake insurance covers
While insurance plans vary in coverage and cost, finding the insurance plan that works best for you depends on many variables. Earthquake insurance is primarily designed to repair or rebuild your home if it’s damaged in an earthquake. It covers some contents, but for the most part it won’t replace all items. Depending on the policy, it may cover additional living expenses if you need to stay somewhere else while your home is being repaired.
All policies have exclusions. Earthquake insurance does not cover damage to vehicles, the land around a home or anything covered by a homeowners insurance policy. The major provider of earthquake insurance in California, the California Earthquake Authority (CEA) provides coverage up to $200,000 for repairs and replacement of personal possessions – including furniture, musical instruments, clothing and linens, medicine and food – with Loss of Use coverage up to $100,000 available without a deductible.
What earthquake insurance costs
The cost of insurance varies based on location. Coverage in a high-risk area comes with a higher price tag.
The cost also fluctuates depending upon the deductible you select, which is the amount you pay out of pocket before the insurer will cover any remaining expenses. Opting for a higher deductible will lower the premium payment.
Earthquake insurance deductible options are represented as a percentage of the amount for which your home is insured. For example, if you select a 10% deductible for a home with a replacement cost value of $300,000, then you are responsible for the first $30,000 in repairs. The insurance carrier would then cover the remainder of an eligible claim.
How to get earthquake insurance
Earthquake insurance from the California Earthquake Authority can be purchased from your local independent Mercury Insurance agent. A few companies also offer stand-alone policies, which do not have to be purchased through your agent.
Taking care of other risks
Retrofitting or modifying your home to make it stronger and safer is a risk-reducing option to protect against earthquake damage. Retrofitting includes home maintenance, such as bolting your house to the foundation, and strapping water heaters to the house structure.
Talk to your agent about adding earthquake insurance today—you could regret not being covered when the next big quake strikes.