The cost of earthquake insurance varies depending on a number of factors, including the value of your home, the location of your home, and the deductible you choose. In general, earthquake insurance is more expensive in areas with a higher risk of earthquakes.
But that’s just on the surface. So, let’s take a step further into all you should know about earthquake insurance and how much it costs.
Quick Answer
According to the California Earthquake Authority, the average cost of earthquake insurance in California is $3.54 per thousand dollars of coverage. This means the annual cost of earthquake insurance for a $500,000 home would be approximately $1,770.
However, the cost of earthquake insurance can vary significantly depending on the abovementioned factors. For example, a home in a high-risk area will have a higher premium than a low-risk one. A home with a higher deductible will also have a lower premium than a lower one.
The best way to get an accurate estimate of the cost of earthquake insurance is to get quotes from multiple insurance companies. You can do this online or by contacting insurance agents directly.
What Is the Cost of Earthquake Insurance?
In the United States, the average cost of earthquake insurance is $800 per year. Keep in mind that insurance for a single-family home in California can be more expensive—between $1,248 and $2,744 per year for $500,000 of coverage.
Your coverage limits, deductibles, and a number of other variables will, however, affect the precise cost of earthquake insurance.
- Zip code
- Home’s age
- Distance between fault lines
- The materials used to construct your home
- What would it cost to rebuild your house?
In addition, California residents can use the California Earthquake Authority’s (CEA) premium calculator to estimate how much earthquake insurance will cost.
Factors Influencing the Cost of Earthquake Insurance
The cost of earthquake insurance, like any other type of insurance, is subject to a variety of factors. The risk level in the customer’s geographic location, the type and amount of coverage chosen, and the structure of the home are some of the main factors, but there are many other factors that can affect the cost.
#1. Level of Earthquake Danger
In general, the higher the risk of earthquakes in a policyholder’s area, the higher the cost of earthquake insurance coverage. This is because homeowners and renters who live in high-risk areas are more likely than those who live in low-risk areas to file a claim on their earthquake insurance policy. This increases the insurance company’s cost of covering policyholders in high-risk areas, so they charge a higher rate to help offset the higher cost of coverage.
The United States considers homes in California, Washington, Oregon, Nevada, Alaska, and Hawaii in general. According to the United States Geological Society (USGS), certain areas are more vulnerable to earthquake damage than others. Earthquakes can, however, occur in other states as well. Customers can check the USGS website to find out what the risk is in their area.
#3. Type of Coverage
When purchasing earthquake insurance, a policyholder can choose between four types of coverage: dwelling, other structures, personal property, and loss of use. A homeowner who purchases earthquake insurance will most likely want to ensure they are covered for all four, whereas a renter will only need to consider personal property and loss of use coverage. Each coverage type is explained in greater detail in a later section, but here are some basic explanations of the various types of coverage.
- Dwelling coverage protects both the home and any attached structures. If an earthquake damages the home, foundation, or concrete slab, the homeowner would file a claim under their dwelling coverage.
- Coverage for other structures is intended for unattached structures such as sheds, garden fences, and detached garages.
- Personal property coverage assists in the replacement of any items damaged or destroyed by an earthquake. Because certain valuable personal property may be underinsured, the policyholder may want to purchase additional coverage for scheduled items such as artwork, jewelry, or sports equipment to ensure they are protected in the event of an earthquake.
- Loss of use coverage assists the policyholder in covering any additional living expenses incurred if they are forced to leave their home while repairs are being made.
#4. Coverage Amount
Customers can select the amount of coverage they require when purchasing earthquake insurance. In general, they should make sure they have enough dwelling coverage to rebuild their house in the event of a levelling and enough personal property coverage to replace their belongings in the event of a seismic event.
A large home in an expensive area, such as a city, typically requires more coverage than a small home in a less expensive, rural area. Similarly, a policyholder with many high-quality belongings will require more personal property coverage than one with a few low-cost belongings. The greater the amount of coverage, the more likely the policyholder will pay for earthquake insurance coverage.
#5. Insurance Company
The cost of earthquake insurance coverage varies according to the insurance company. A homeowner or renter may receive very different quotes from different insurers, which is why it’s critical to obtain multiple quotes and compare them to find the one that best fits the customer’s needs and budget. Customers can get quotes from the best homeowners insurance companies online, but they may need to call or visit an agent to get a specific quote for earthquake coverage.
#6. Building Supplies
Homes made of certain materials are more vulnerable to earthquake damage. A home made of stone or brick, for example, is more likely to sustain damage than one made of wood or concrete. Furthermore, a house with an old or crumbling concrete slab will fare worse in an earthquake than one with a reinforced concrete foundation. As a result, the home’s construction materials will have an impact on earthquake insurance costs.
#7. Type of Foundation
A home can be built on a variety of foundations, and the type of foundation can affect the home’s ability to withstand an earthquake. A raised foundation, for example, means the home has more elasticity, allowing it to move during a seismic event and sustain less damage than a home built on a basement or concrete slab. Policyholders with raised foundations will most likely pay less for earthquake insurance.
#8. Home Age
There are often specific seismic building codes in place in areas where earthquakes are common. However, homes built before these codes were implemented are frequently not retrofitted to be more seismically resistant. If an older home is not bolted to its foundation or has not had crawl space walls braced, for example, an insurance company may charge a much higher premium—or, in some cases, refuse coverage entirely unless the homeowner can bring their home up to code.
#9. Soil Characteristics
The type of soil on which the house is built can also influence the cost of earthquake insurance. The surface of a rock or clay is more rigid than that of a sandier soil. When an earthquake strikes, a home built on a rigid surface will lack elasticity and thus be more prone to damage. Due to its elasticity, a home built on a sandy surface is more likely to survive an earthquake with minor damage. Prices for earthquake insurance will reflect these variations in soil types.
#10. Endorsement vs. Standalone Insurance
An earthquake endorsement may be added to a policyholder’s current homeowners or renters insurance policy. For policyholders on a tight budget, this can be a less expensive option, though an endorsement typically does not provide as much coverage as a standalone insurance policy.
If a policyholder opts for a separate earthquake insurance policy, they will be more fully covered if an earthquake strikes their home, but that coverage may be more expensive.
#11. Deductible
An earthquake insurance policy, like homeowners and renters insurance policies, has a deductible that represents the portion of an approved claim that the policyholder is required to pay. Some insurance deductibles are set in dollars, but an earthquake insurance deductible is typically set as a percentage of the coverage amount, typically between 5% and 25%. If a policyholder files a claim under their dwelling and personal property coverage, they will most likely be required to pay two separate deductibles.
When a policyholder chooses a low deductible, their insurer will pay them more money if they file a claim after an earthquake. However, because of the low deductible, the policyholder’s premium will be higher. Choosing a high deductible, on the other hand, means paying a lower annual premium but receiving a lower payout when a claim is approved—which means the policyholder will have to pay more money out of pocket if earthquake damage occurs.
#12. Geographical Area
The cost of earthquake insurance can vary depending on where the policyholder lives. Because the likelihood of an earthquake in Wisconsin is very low, an earthquake policy in that state would most likely cost much less than the average range of $800 to $5,000. However, there are several fault lines on the West Coast, including the well-known San Andreas Fault, that increase the risk of serious damage from seismic activity; as a result, earthquake insurance will be more expensive.
The cost of coverage can vary dramatically even within the same state.
#13. Discounts
Customers looking for earthquake insurance should inquire with their insurer about any available discounts that could lower their premiums. Policyholders who add an earthquake endorsement to their homeowners insurance policy may be able to benefit from one of the best home and auto insurance bundles, lowering their overall insurance costs and making earthquake coverage more affordable. Furthermore, some insurers may provide discounts for homes built on a slab or with a reinforced crawl space, because these structures are more likely to withstand an earthquake.
The California Earthquake Authority (CEA) also offers discounts for earthquake-proofed homes, with discounts ranging from 10% to 25% depending on the age of the home and the type of foundation it is built on. The CEA estimates that earthquake retrofitting costs between $3,000 and $7,000, depending on the level of work required. Do I need earthquake insurance?
It all depends. Earthquake insurance isn’t required, but depending on where you live, your home could sustain irreparable damage. California law requires homeowners insurance companies to provide add-on earthquake coverage, but there is no requirement that anyone purchase a policy.
According to California Earthquake Authority CEO Glenn Pomeroy, only 13% of Californians buy earthquake insurance because they don’t believe it will happen to them. They also believe that their homeowners or renters insurance policy will cover earthquake damage.
Quick Tips
While many people believe that only California is at risk for earthquakes, there are 42 other states that are also at risk, with 16 of them experiencing magnitude six or greater quakes on the Richter scale.
If you don’t have enough money saved to rebuild your home, replace your personal belongings, and cover temporary living expenses, you should seriously consider purchasing earthquake insurance. Remember, that budget is in addition to the ongoing costs of repaying your mortgage, even if your home has been completely destroyed.
If an earthquake has recently occurred in your area, insurers will typically not sell new policies for several months.
Is it Worth it to Buy Earthquake Insurance?
Some argue that because of the high cost of deductibles and premiums, earthquake insurance is prohibitively expensive and thus not worth the money.
To determine whether an earthquake insurance policy is worthwhile for you, first determine the potential risk of where you live. Use this map from the US Geological Survey to determine the likelihood of an earthquake in your area (you might be surprised to learn that you’re closer to a fault line than you thought).
What Is the Procedure for Earthquake Insurance Deductibles?
When you file an earthquake damage claim for your home, you must first pay your policy deductible before your insurance will cover the rest. Earthquake insurance policies typically have “percentage” deductibles, which means you’ll pay a percentage of your home’s coverage amount rather than a fixed dollar amount.
Most insurers offer earthquake deductibles ranging from 5% to 25%. Most insurers will require you to pay separate deductibles for the dwelling and personal property portions of your policy if you file a claim for damage to your home’s structure and belongings.
Is Earthquake Insurance in California Worth it?
In California, earthquake insurance is most likely worthwhile. California accounts for roughly two-thirds of the country’s earthquake risk, and it accounts for 61% of the country’s average annual earthquake losses. To summarize, if there is one state where homeowners should have earthquake insurance, it is California.
If you live within 30 miles of an active fault (you can check this here), you should consider earthquake insurance. Earthquake insurance is available from the California Earthquake Authority (CEA). If you want to save money, the CEA says it has flexible insurance options that can be tailored to your needs.
What if you don’t have earthquake coverage?
Homeowners insurance does not cover “earth movement,” which includes damage caused directly by earthquakes. So, if you don’t have earthquake coverage, you’ll have to pay for any earthquake damage yourself. If the quake is declared a “major disaster” by the federal government, affected residents may be eligible for a limited amount of government assistance.
What is the cost of repairing earthquake damage to your home?
According to Home Advisor, the average cost of home repairs following an earthquake ranges from $1,000 to $30,000.
Is earthquake insurance required if I live on the East Coast?
Even though earthquakes are far more common on the West Coast than the East, they do occur. One advantage is that because earthquakes are much less common in these areas, earthquake insurance is typically less expensive.
According to the Insurance Information Institute, homeowners on the East Coast can likely purchase earthquake insurance for less than $0.50 per $1,000 of coverage. This means that earthquake insurance would cost around $250 per year for a $500,000 home.
Is earthquake coverage included in renters insurance?
Most standard renters insurance policies do not cover earthquake damage. To ensure you’re fully covered, you may be able to add an earthquake endorsement to your renters insurance policy or purchase an entirely separate earthquake insurance policy.
Why are earthquake insurance deductibles so high?
Earthquakes have the potential to destroy entire homes and buildings. As a result, insurance companies face a significant risk in insuring them. Insurance companies must charge higher deductibles to cover the potentially significant losses from a major earthquake.
What exactly is earthquake insurance?
Earthquake insurance is a type of property insurance that protects you against earthquake-related damage to your home and personal belongings. This coverage can be added as an endorsement to your current homeowners insurance policy or sold as a separate policy through another insurer or government agency.
Does homeowners insurance cover earthquake damage?
Home insurance policies typically exclude earthquake damage. However, some related damage, such as a fire that occurs after an earthquake, may be covered by your policy. In that case, the fire damage will most likely be covered by your homeowners insurance. You will most likely need to purchase an earthquake endorsement or a separate policy to be covered for seismic activity.
Is earthquake insurance necessary if you don’t live on a fault line?
Even if you do not live on a fault line, you should consider earthquake insurance. Earthquakes are also a possibility in mine areas and areas where hydraulic fracturing (fracking) is practiced. This practice has increased earthquakes in areas where none previously existed. Mine subsidence insurance may also be appropriate for you, depending on the location of your home.
Is my earthquake insurance going to cover flooding?
Earthquake insurance covers seismic movement only, not flooding. If you live in a flood zone or are concerned about flooding after a natural disaster, you should look into flood insurance. Flood insurance is available from the National Flood Insurance Program as well as from a few private carriers.
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