Earthquake Insurance in California: Requirements, Coverage, Costs

  • While earthquake insurance is optional in California, home insurance companies must offer it to new home buyers.
  • Earthquake insurance covers your home, personal property, and provides loss of use insurance.
  • You can purchase earthquake insurance through your homeowners insurance provider.

California has a reputation as the earthquake capital of the United States. However, according to the Federal Emergency Management Agency (FEMA), only 10% of California residents have earthquake insurance.Many homeowners are ill-prepared for earthquake-related financial losses that fall outside the norm

homeowners insurance

policy. If you are a Californian living near a major fault line, you can protect yourself by purchasing earthquake insurance.

Does California Need Earthquake Insurance?

California homeowners are not legally obligated to purchase earthquake insurance, and

mortgage lender

It’s not needed, said Glenn Pomeroy, chief executive of the California Earthquake Agency (CEA), the nation’s largest earthquake insurance provider. However, California law requires providers such as State Farm and Allstate to proactively offer earthquake and homeowners insurance to new home buyers, according to Pomeroy.

Homeowners insurance does not cover earthquakes. You must purchase a separate policy to get coverage. Given the large number of devastating earthquakes that hit California every year, it’s prudent to do so with caution.

According to the United States Geological Survey (USGS), here are a few things you should consider when determining whether you need an earthquake insurance policy:

  • Your home’s location on an active seismic fault
  • Earthquake frequency in your area
  • the time of the last earthquake
  • Materials on your home’s construction and foundations
  • the structure of your home
  • The quality of workmanship in your home

What Does Earthquake Insurance Cover in California?

Earthquake insurance covers the cost of replacing and repairing your home and household items after an earthquake. It will also cover any additional living expenses you incur if your home is temporarily uninhabitable.

Earthquake insurance only covers damage caused by land movement or landslides. It does not include fire and flood. Your homeowners insurance policy covers this. Earthquake insurance does not cover flood damage, which requires separate insurance.

How Much Does Earthquake Insurance Cost in California?

“Earthquake insurance can cost anywhere from $730 to $2,000,” Pomeroy said. Costs vary based on a number of factors, such as your home and building materials. Earthquake insurance is not available as a stand-alone policy and must be purchased with your homeowners insurance policy.

Earthquake insurance deductibles typically range from 5% to 15% of the earthquake insurance policy limit, according to the Insurance Information Institute. They are usually higher than the deductible of a homeowner’s insurance policy.

While earthquake insurance can be very expensive, especially in high-risk areas, you can still lower your premiums through mitigation measures. For example, the CEA offers discounts for older timber-framed homes with raised or other non-slab foundations. Many vendors also offer discounts on homes that have been seismically retrofitted.

How to Buy California Earthquake Insurance

The CEA recommends taking these steps to purchase insurance in California.

Step 1: Know your risk

Knowing how prone your area is to earthquakes is a primary consideration when determining whether you need earthquake insurance. FEMA provides seismograms showing this. The colors on the map indicate the risk level of an area, also known as the seismic design category.

resource: Federal Emergency Management Agency

Step 2: Get a free cost estimate

The cost of your policy will vary based 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, how much homeowners insurance you have, and the type of roof and foundation your home has.

Then, you’ll see your estimated monthly premium. If you wish, you can adjust your deductible, personal property, loss-of-use coverage, and add coverage to your policy.

Step 3: Call your insurance company

You must purchase earthquake insurance through a residential insurance company. Once you get an earthquake insurance estimate, speak with your insurance agent who will process your application.

Your provider will also manage your premium payments and policy renewals. Also, they can help you file a claim if an earthquake damages your property.

Note that, according to the National Association of Insurance Commissioners, most insurers won’t sell new policies for a period of time after an earthquake—usually 30 to 60 days. The best time to buy a policy is before an earthquake strikes.

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