California Earthquake Insurance: Requirements, Coverage, Cost
- While earthquake insurance is optional in California, home insurers must offer it to first-time buyers.
- Earthquake insurance covers your home, personal property and provides coverage against loss of use.
- You can take out earthquake insurance with your home insurer.
California has a well-deserved reputation as America’s earthquake capital. Yet only 10% of California residents have earthquake insurance, according to the Federal Emergency Management Agency (FEMA). Many owners are not sufficiently prepared for the financial losses associated with earthquakes, which are not covered by the standard
Strategies. If you are a Californian living near a major fault line, you can protect yourself with earthquake insurance.
Is earthquake insurance mandatory in California?
California homeowners are not legally required to carry earthquake insurance, and
don’t demand it, says Glenn Pomeroy, chief executive of the California Earthquake Authority (CEA), the nation’s largest provider of earthquake insurance. However, California law requires providers like State Farm and Allstate to proactively offer earthquake insurance in conjunction with a homeowners insurance policy to first-time buyers, according to Pomeroy.
Home insurance will not cover earthquakes. You must purchase a separate policy to obtain coverage. Given the large number of earthquakes causing damage in California each year, it is wise to carefully consider doing so.
Here are some things to consider when determining if you need an earthquake insurance policy, according to the United States Geological Survey (USGS):
- The location of your home relative to active seismic faults
- The frequency of earthquakes in your area
- When the last earthquake happened
- The materials of the construction and foundations of your house
- The architectural structure of your house
- The build quality of your home
What does California earthquake insurance cover?
Earthquake insurance covers the cost of replacing and repairing your home and its contents after an earthquake. It will also cover any additional living expenses you incur if your home becomes temporarily uninhabitable.
Earthquake insurance only covers losses caused by ground movements or landslides. It will not cover fire and water damage. Your home insurance policy covers this. Earthquake insurance will not pay for flood damage, which requires separate coverage.
How much does earthquake insurance cost in California?
“Earthquake insurance can cost between $730 and $2,000,” Pomeroy says. The cost varies depending on several factors, such as your home and building materials. Earthquake insurance is not available as a standalone policy and must be purchased at the same time as your home insurance policy.
Deductibles for earthquake insurance are typically 5% to 15% of your earthquake insurance policy limit, according to the Insurance Information Institute. They are generally higher than the deductibles of a home insurance policy.
Although earthquake insurance can be quite expensive, especially in high-risk areas, you can always reduce your premiums through mitigation efforts. The CEA, for example, offers a discount for old wooden frame houses with raised foundations or others without a slab. Many providers also offer discounts for seismically retrofitted homes.
How to Get Earthquake Insurance in California
The CEA advises taking these steps to purchase insurance in California.
Step 1: Know your risk
Knowing how prone your area is to earthquakes is the primary consideration in determining whether you need earthquake insurance. FEMA offers seismic maps that show this. The colors on the maps indicate an area’s hazard levels, also known as seismic design categories.
Step 2: Get a free quote
The cost of your policy will vary depending on several factors. You can get a premium estimate using CEA’s free premium calculator.
You will be asked a series of questions about your home, such as your address, the year your home was built, the amount of your homeowners coverage, and the type of roof and foundation your home has.
Then you will see your estimated monthly premium. You can adjust your deductible, personal property, loss of use coverage, and add coverage to your policy if you wish.
Step 3: Call your insurance company
You must take out an earthquake insurance policy with your home insurer. Once you have obtained your earthquake insurance estimate, speak to your insurance agent and they will process your claim.
Your provider will also manage your premium payments and policy renewals. Plus, they can help you file a claim if an earthquake damages your property.
Note that most insurers won’t sell new policies for some time after an earthquake — typically 30 to 60 days, according to the National Association of Insurance Commissioners. The best time to buy a policy is before an earthquake hits.