Broker Check

Earthquake Insurance

July 22, 2019

The recent earthquake in Southern California is a reminder of the potential for a natural disaster that many people are not insured against. Fortunately, the earthquake in Southern California occurred in a relatively low population density area so the property damage was fairly low. Had the earthquake epicenter been in an area with higher population density the projected property damage losses would likely have been much larger. Yet most people do not have earthquake insurance to protect themselves from this risk.

Contrary to popular belief, normal homeowner’s insurance policies do not cover damages from earthquakes. In most States earthquake insurance is covered by a separate program which must be purchased separately and is subject to different limits than other insurance policies.

Specifically, earthquake policies often have much higher deductibles which can be as high as 20% of the amount of the loss. In addition, there are often lower limits for personal property as well as the requirement to get add-on coverage for personal property described as breakables. This coverage can also be purchased by renters who seek to cover their personal property from earthquake damage. There is also a third type of add-on coverage that can offset increased living expenses should a covered home become uninhabitable due to an earthquake. All of these details make coverage quite expensive but may be the only avenue for financial recourse should an earthquake damage or destroy your property.