What is Earthquake Insurance?

Even though California is more prone to earthquakes than any other state, that does not mean your state is off the hook. No matter where you live in the United States, you, too, can experience an earthquake.

For this reason, homeowners, especially those living in high-risk areas, should consider obtaining earthquake insurance. In short, earthquake insurance protects you from the damages that occur to your home during an earthquake.

Do You Need Earthquake Insurance?

Most parts of the United States are somewhat prone to experiencing an earthquake. Over a 20-year duration from 1975 to 1995, earthquakes occurred in each state except Florida, North Dakota, Iowa, and Wisconsin.

In 2016, 8% of the homeowners in the United States had earthquake insurance as per the Insurance Information Institute. The California Insurance Department stated that only 11% of the homeowners in the state had acquired earthquake insurance.

For this reason, homeowners living in areas prone to earthquakes should consider taking out earthquake insurance. If you reside in one of the areas prone to earthquakes or you want to better protect yourself in the event one does occur in your area, you should learn more about earthquake insurance. If you are unsure on whether you should apply for earthquake insurance, use the following factors to decide:

  • Your proximity to the active earthquake faults
  • The seismic history of your area or frequency of earthquakes
  • Time since your area experienced its last earthquake
  • Type of building and foundation of your home
  • Its architectural design or layout
  • The materials used to build your home
  • The quality of workmanship
  • To what extent the designer considered earthquake resistance when designing your home
  • The local condition of the site
  • The slope of the land and fill material used
  • The geological structure of the earth under your property
  • The amount of rain your area gets
  • The value of the home and its contents
  • The cost of earthquake insurance and the limitations of the coverage, such as the deductible

What Does Earthquake Insurance Cover?

Earthquake insurance covers your dwelling, personal property, and additional living expenses. Dwelling coverage protects you in the event your home suffers from damage, but does not cover landscaping, fences, swimming pools, and separate buildings or masonry.

Personal property coverage protects the inside of your home such as your furniture, electronics, and appliances, but does not cover fragile items and if you own some, you need to buy additional coverage for them. Additional living expenses coverage repays you if you have to live in another property in the event your home has been damaged or destroyed and you need to rebuild it or make repairs to it.

How Does Earthquake Insurance Work?

You will need to pay a deductible each month for your earthquake insurance. For instance, your home is worth $300,000 and you have a 2% deductible, you will only need to pay $6,000 in damages and repairs while your insurance provider will cover the rest.

It’s better to be safe than sorry when it comes to earthquakes. If you want to protect yourself and your home, you should obtain earthquake insurance.

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