Most home insurance policies do not cover earthquake damage. Earthquakes have occurred in 39 states since 1900, and about 90% of Americans live in areas considered seismically active.
Do I really need earthquake insurance?
There are many states in the U.S. that would be better protected by purchasing earthquake insurance. Consider the facts:
- In the West – According to the U.S. Geological Survey, there is a 70 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike the San Francisco Bay area during the next 30 years.
- In the East – The Earthquake Education Center at Charleston Southern University claims there’s a 40 to 60 percent chance of a major earthquake somewhere in the eastern United States in the next 20 years.
- In the Midwest – According to the Insurance Information Institute, there’s a 40 to 63 percent chance the New Madrid Fault (which runs through Arkansas, Kentucky, Missouri and Tennessee) region will suffer an earthquake with a 6.0 magnitude in the next 15 years.
Earthquake insurance can have many options
Most homeowner, condo and rental insurance policies do not cover damage caused by an earthquake, but coverage can be purchased as an endorsement or a separate policy. You may be able to choose to purchase earthquake insurance from the same company that provides your home insurance, from a specialized earthquake insurance provider, or from an independent organization such as the California Earthquake Authority (CEA).
What does earthquake insurance cover?
Earthquake insurance provides coverage if your home is damaged by an earthquake. An earthquake endorsement generally excludes damages or losses from floods and tidal waves – even when caused or compounded by an earthquake. However, if you experience a loss due to a landslide, settlement, mudflow, or the rising, sinking and contracting of earth, your endorsement may cover it if the damage resulted from an earthquake.
There are several options to consider when purchasing earthquake insurance, including:
- Does the policy cover only your home? Are other structures, such as garages, also included?
- Will your policy pay for the contents of your home and for additional living expenses if your home is badly damaged or destroyed?
- Are there any exclusions or limitations to coverage?
- What deductible must you pay before the insurance kicks in?