Most home insurance policies do not cover earthquakes, which may come as a surprise to you. You might even dismiss it, believing that earthquakes are uncommon, but the fact is, 90% of Americans live in earthquake-prone areas. On the other hand, only about 8% of homeowners have earthquake insurance. This is why it is crucial to understand the best earthquake insurance policies and companies. Here are some things to think about when looking for earthquake insurance.
What to Look for When Choosing an Earthquake Insurance Company
You should compare coverage options for the companies you’re considering, just like for any other type of insurance.
#1. Flexible Deductible Options:
The main reason that more at-risk homes do not have earthquake insurance is most likely due to high deductibles.
Often, earthquake insurance deductibles are calculated as a percentage of the home’s insured value. If one insurer offers a 5% deductible while another requires a 10% deductible, the difference in compensation if you file a claim can be significant.
#2. Masonry Protection
Many earthquake insurance policies or riders exclude coverage for masonry or veneer damage. In effect, this policy exclusion functions as a second deductible, with the cost of repairing the masonry and your deductible deducted from the claim payment.
Hopefully, you will never need to file a claim, but you should choose a financially sound company because a claim could occur years or even decades from now.
#3. Exclusions
Some earthquake insurance policies have exclusions for certain types of damage, such as damage caused by ground movement or landslides. Be sure to read the fine print carefully to understand what is and is not covered.
#4. Reputation
Choose a reputable insurance company with a good financial rating. This will ensure that your insurance company will be able to pay your claim if you need to file it.
What Does Earthquake Insurance Cover?
The three main expenses covered by most earthquake insurance policies are the dwelling, personal property, and additional living expenses.
#1. Dwelling
The first type of coverage is for your dwelling (your home), which typically means you’ll be reimbursed for the cost of rebuilding your home after an earthquake, but it can also include external structures such as garages, sheds, and, in some cases, swimming pools.
#2. Property
The second category is personal property coverage, which pays the replacement cost for items such as furniture, clothing, or appliances that you keep in your home, though there may be limitations such as an overall reimbursement cap or caps on specific items. If you have valuables such as artwork, jewellery, or family heirlooms you are concerned about not being covered, it is best to speak directly with your agent.
In some cases, you may be able to “schedule” these items, which means you’ll buy more coverage for your listed valuables. Alternatively, if you currently have a home warranty policy, double-check to see if it covers earthquake damage.
#3. Coverage for Additional Living Expenses – Loss of Use
The final category earthquake insurance covers is additional living expenses (ALE), also known as “loss of use” coverage. This covers expenses such as hotel rooms, food, and parking and storage fees you may incur if you are displaced from your home.
Keep in mind that many earthquake policies do not cover common post-earthquake damage such as fires, sinkholes, vehicle damage, or floods.
Best Earthquake Insurance Companies 2023
You may prefer one earthquake insurance company over another based on your priorities, such as a smooth claims-processing experience or the friendliest customer service. BusinessYield has compiled this list of the top earthquake insurance providers for your convenience.
#1. Allstate
Among the many earthquake insurance companies we researched, Allstate was our top choice. The Better Business Bureau (BBB) gave the company an A+ rating. It also received an A+ from A.M. Best, indicating good financial health and a good credit profile.
Allstate offers a wide range of insurance products, including homeowners, renters, auto, and life insurance. It provides coverage in all 50 states as well as Washington, D.C. In addition, earthquake insurance is available in certain areas of the United States, including California.
Remember that your protection may differ depending on where you live and the policy and coverage options you select.
Obtaining a policy is simple. Because Allstate already provides homeowners insurance, you can inquire about adding earthquake coverage to your current policy.
#2. Farmers Insurance Group
Farmers Insurance Group has been BBB accredited since 1951 and has an A- rating. Rebuilding, structural repairs, temporary housing due to loss of use, and personal property protection are all covered.
Farmers excels at claims management. To easily report and manage a claim, use online and mobile claim-reporting options. But that’s not all. Following earthquakes and other major disasters, the company deploys a fleet of vehicles.
The buses serve as Mobile Claims Centers, with representatives on-site to handle your claims. You can also obtain emergency funds to meet immediate needs such as clothing and temporary housing.
If you already have a Farmers homeowners policy, simply contact your agent to add earthquake coverage.
Don’t forget to inquire about any discounts. If you buy home and auto insurance from the same company, you can get multi-line and bundling discounts, lowering your overall costs. You can also save money on your earthquake policy by raising your deductible.
#3. American Family Insurance
A.M. Best has given American Family Insurance an A (Excellent) rating. Best for the past 18 years in a row. It’s a proven company with solid financial strength that you can count on to be around for years to come.
It’s our top choice for insurance discounts because there’s a plethora of money-saving options available to help you lower your insurance premiums. Furthermore, the savings extend beyond the discounts for your auto and home insurance policies. For example, you may be eligible for a discount based on the age of your home, generational policies, qualifying smart home devices, safety features, loyalty savings, and other factors.
In addition to homeowners earthquake insurance, the company provides coverage for condos and renters.
There are two drawbacks to the company to consider. First, you must speak with an agent to obtain an earthquake insurance quote. Although this is not unusual, it is an extra step to take when looking for coverage options.
The second issue is that, despite having excellent credit ratings elsewhere, American Family is not accredited with the BBB.
#4. Amica Mutual Insurance
Amica Mutual Insurance is the best earthquake insurance company for additional coverage. Unlike many other companies, Amica allows you to add earthquake coverage to a standard homeowners insurance policy as an endorsement.
The Catastrophic Coverages upgrade from the company includes flood insurance and protection against property damage caused by seismic activity. Increase your dwelling and personal property replacement coverage, valuable items, identity fraud, and home business insurance are some other options for extended home insurance.
If you’re looking for top-tier coverage, Amica has you covered. Water backup, credit card coverage, computer coverage, and business property coverage are all included in Platinum Choice home protection.
In addition to personalized options, the insurer receives high marks for customer service. J.D. has awarded Amica the highest level of customer satisfaction. For 17 years in a row, Power has ranked second in the United States.
#5. Nationwide
Damage to your home, other structures on your property, personal belongings, and loss of use are all covered by a typical Nationwide policy. Loss of use is an important component of earthquake insurance. It can cover the cost of a hotel room and additional living expenses if you are unable to live in your home while it is being repaired.
However, earthquake damage can be severe, and the cost of replacing your items may exceed your policy’s coverage limit.
That is why Nationwide goes above and beyond to help cover the costs. According to the company, your initial claim is based on the depreciated value of your covered items. However, if you send in the receipt after purchasing the replacement items, the company will pay the difference.
#6. GeoVera
GeoVera’s online experience is simplified. You can obtain a free insurance quote online without speaking with an agent. As a result, they were named the best earthquake insurance company for online experience.
GeoVera specializes in disaster insurance, such as windstorm, hurricane, and earthquake coverage. The disadvantage is that their earthquake coverage is limited to three states: California, Oregon, and Washington.
There is a combined limit for dwelling coverage, other structures, personal property coverage, and loss of use coverage in the earthquake policies. A single limit, rather than individual limits, gives policyholders more flexibility in how they use their coverages.
There is no option to bundle your coverage because the company does not provide traditional homeowners or auto insurance.
The business has an A+ rating despite not being Better Business Bureau-accredited. GeoVera also has an A.M.
#7. State Farm
State Farm is well-known for its extensive network of insurance agents across the country. The company has been in operation since 1922 and has received the highest possible rating from A.M. Best of all, an A++.
Their long-standing reputation as “like a good neighbor” is supported by over 19,000 agents in communities across the United States. If you prefer to conduct business in person, they have you covered. That is why we selected State Farm as the best quake coverage for in-person service.
Consider bundling your coverage if you own a home, condo, or mobile home to qualify for State Farm insurance premium discounts.
#8. Country Financial
Country Financial received 855 out of 1,000 possible points in the study, which considered customer satisfaction levels. That is what propelled them to the top of our list of best customer service providers.
This company, like the others on our list, provides comprehensive homeowners insurance coverage with the option to add earthquake protection if your home qualifies.
Country Financial was established in 1925. The provider has expanded to include auto, homeowners, life, and health insurance. Customers can also access the company’s annuities and investment products.
Aside from excellent customer service, you can take advantage of discounts to keep your earthquake insurance costs low. Country Financial, for example, provides a multi-policy discount, alarm credit discount, dwelling age discount, and other benefits.
With over one million policies, the California Earthquake Authority (CEA) is one of the world’s largest providers of residential earthquake insurance. The CEA is the best earthquake insurance company for Californians, with over 25 participating insurance companies.
According to the California Department of Conservation, 70% of residents live within 30 miles of a fault line. That means that no matter where you live in California, you are in an earthquake-prone area.
Rates may be higher in areas prone to earthquakes. The CEA, on the other hand, offers discounts on earthquake insurance premiums if you take steps to make your home or mobile home more earthquake resistant.
Keep in mind that the CEA does not provide direct insurance. Instead, participating companies write policies for the organization. You can go through the CEA, but your coverage will be provided by companies such as Allstate, Amica, Farmers, and others.
#10. Pure
Consider Pure for earthquake protection if you own a high-value home. Pure is a member-owned insurer that specializes in high-net-worth clients.
A standard Pure homeowners policy, like most other policies, excludes earthquake coverage. With an earthquake endorsement, however, you get earthquake coverage for your home, contents, and loss of use.
The provider is not accredited by the BBB, but it does have a B- rating from the organization, despite receiving high marks in other areas. For the third year in a row, the company was named Best High Net Worth Insurance Company in 2020.
#11. Liberty Mutual
Not all providers provide renters with earthquake insurance. However, Liberty Mutual stands out for offering earthquake coverage in addition to renters insurance. By offering an online application and claims process, the company also makes it simple to secure and manage a policy.
If you file an earthquake damage claim, you must pay a deductible. However, damage from aftershocks occurring within 360 hours of the initial earthquake will be included in the same claim under your policy. This means that you only need to pay your deductible once per earthquake.
A Liberty Mutual renters policy includes additional living expenses coverage as standard. If earthquake damage renders your home uninhabitable, your policy will cover the cost of a hotel room and any other expenses you may incur.
#12. Lemonade
Lemonade, like other insurance companies, does not cover flood or earthquake damage as part of its standard homeowners insurance. California residents, on the other hand, can purchase a separate earthquake policy from Lemonade. This add-on policy is available in California to both renters and homeowners.
Lemonade’s earthquake insurance policy includes the following coverage:
- Damage to your home and its outbuildings with dwelling coverage
- Personal property coverage provides reimbursement for the cost of damaged property.
- Additional expenses you may incur if you are unable to stay in your home due to loss of use coverage
- Your policy does not cover flood damage, sinkholes, vehicle damage, or fire, whereas your standard home insurance policy or other add-ons may.
What types of home insurance claims are most common?
Wind and hail claims top the list, accounting for nearly 40% of all home insurance claims. Fire and lightning are the second most common, but fire claims are much larger than claims from other types of risk. Because of the possibility of a total loss, it is critical to insure your home for the full cost of rebuilding. Get a personalized quote today.
I’m going to sell my house. When should I cancel my homeowners insurance policy?
Most agents will advise you to keep your coverage in place until the day after your closing. Home insurance policies typically have an effective date and time of 12:01 AM that begins and ends at that time. This means that a policy that expires on the first of the month is only in effect for one minute of that month. Maintaining your policy until after your closing ensures that the home you are selling is still insure.
What should I do if my home has been damaged?
In the event of major damage, you should contact your insurer or agent as soon as possible. As part of a home insurance policy, you agree to promptly notify the insurer of any claims. If necessary, your insurer can arrange for remediation, which may include boarded-up windows, roof tarps, and other measures. If you can do so safely, take action to mitigate the damage. As an example, if you have a burst pipe, you should turn off the water supply.
Who should consider purchasing earthquake insurance?
Anyone who lives near a fault line or is otherwise vulnerable to ground tremors should consider buying earthquake insurance. Consider the region’s history of seismic activity, the geologic conditions of the area, and the construction of the home itself when deciding whether to purchase earthquake insurance.
How much does earthquake insurance typically cost?
Earthquake insurance costs are determined by a variety of factors, including local risk factors, property conditions, policy terms, discounts, and more. As a result, it’s difficult to predict how much homeowners will pay for this type of coverage. If their property has been properly retrofitted, California residents who purchase earthquake coverage through members of the California Earthquake Authority may be eligible for a 20% discount.
Which insurance policies cover earthquakes?
Standard homeowners insurance may cover hazards that occur in the aftermath of an earthquake, such as fire, but it will not cover damage directly caused by seismic activity. Damage from a burst water line caused by an earthquake, for example, would almost certainly be covered by homeowners insurance. To cover any structural damage caused by an earthquake, a separate earthquake insurance policy will be required.
How much damage is covered by earthquake insurance?
Coverage limits are determined by the type of earthquake policy purchased. As a standard term, many policies include dwelling coverage, which typically covers the property up to the amount specified in the policyholder’s homeowners insurance. Personal property and loss of use coverage may also be included in earthquake insurance. Personal property coverage may be as low as $5,000 even among the best earthquake insurance companies in California. California residents, on the other hand, may be able to purchase additional earthquake coverage up to $200,000.
How long does it take to receive payment on an earthquake insurance claim?
The time required to process and pay out an earthquake insurance claim varies depending on the insurance provider. It’s important to understand that some insurance companies require all earthquake insurance claims to be filed within a year of the covered event. Any claims submitted after that date may be denied.
Earthquake insurance cannot be applied to previous incidents. As a result, homeowners will be unable to seek compensation for damages caused by seismic events that occurred prior to the start of coverage. Furthermore, following a disaster, insurance companies may temporarily suspend extending new earthquake insurance policies, allowing only existing policyholders to file a claim.
Is it necessary to purchase earthquake insurance when purchasing a new home?
Unlike flood insurance, which is sometimes required to secure a mortgage, earthquake insurance is never required for home buyers. However, homeowners in high-risk areas with frequent seismic activity should consider purchasing a separate policy or adding an endorsement to their existing homeowners’ insurance.
Is there a cap on how much earthquake insurance will pay out?
Every earthquake insurance policy has policy limits that limit how much can be paid out on a claim. In many cases, earthquake insurance policy limits do not exceed the policy limit on the customer’s homeowners insurance. This is because homeowners insurance is frequently required to cover the cost of replacing the entire structure, so that amount would also meet earthquake insurance requirements.
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