California is one of the most earthquake-prone states in the United States, with over 16,000 known earthquake faults. While earthquakes can happen anywhere in the world, Californians are at an increased risk of experiencing a major earthquake at some point in their lives.
So it’s understandable why anyone would be curious about the insurance policies around earthquakes in California.
Earthquake insurance is not required by law in California but it is highly recommended.
Homeowners insurance policies do not cover earthquake damage, so without a separate earthquake insurance policy, you would be responsible for the full cost of repairing or rebuilding your home after an earthquake.
In this article, we will discuss the benefits of earthquake insurance and why it is so important in California. We will also answer some common questions about earthquake insurance, such as how much it costs and how to get a quote.
Earthquake Insurance in California
- In California, insurance companies are required by law to provide earthquake insurance when you purchase homeowners insurance. Every other year, your insurance company must provide you with earthquake insurance.
- The offer must be in writing and include information about the policy’s limits, deductible, and premium. You have 30 days to accept or decline the offer. You are under no obligation to purchase the policy. You are rejecting the offer if you do not respond.
- The California Earthquake Authority (CEA) provides approximately 65% of residential earthquake insurance policies in California. A policy cannot be purchased directly from the CEA, but it can be purchased from insurance companies that are CEA members.
- You must first have a residential property insurance policy to purchase a CEA policy. In addition, you must purchase your CEA policy from the same insurance company that provides your home insurance.
- In California, it is legal for renters’ and homeowners’ insurance to cover fire damage resulting from an earthquake, even if you don’t purchase an earthquake policy.
Is Earthquake Insurance Required in California?
According to Glenn Pomeroy, chief executive officer of the California Earthquake Authority (CEA), the nation’s largest earthquake insurance provider, California homeowners are not legally required to purchase earthquake insurance, and mortgage lenders do not require it. According to Pomeroy, California law requires providers such as State Farm and Allstate to offer new homebuyers earthquake insurance in conjunction with a homeowners insurance policy.
Earthquakes are not covered by homeowner insurance. To obtain coverage, you must purchase a separate policy. Given the high number of damaging earthquakes in California each year, it is prudent to exercise caution.
According to the United States Geological Survey (USGS), the following factors should be considered when determining whether you require earthquake insurance:
- The distance between your house and active earthquake faults
- The occurrence of earthquakes in your area
- When was the last earthquake?
- The materials used in the construction and foundation of your home
- Your house’s architectural structure
- The level of craftsmanship in your home
What Does Earthquake Insurance in California Cover?
Earthquake insurance covers the cost of replacing and repairing your home and its contents in the event of an earthquake. It will also cover any extra living expenses incurred if your home becomes temporarily uninhabitable.
Earthquake insurance only covers losses caused by landslides or land movement. It excludes fire and water damage. That is covered by your homeowners insurance policy. Flood damage, which requires separate coverage, is not covered by earthquake insurance.
What Is the Cost of Earthquake Insurance in California?
According to research, earthquake insurance can cost anywhere from $730 to $2,000. The cost varies depending on several factors, including the size of your home and the materials used in its construction. Earthquake insurance cannot be purchased separately but in conjunction with your homeowner’s insurance policy.
According to the Insurance Information Institute, earthquake insurance deductibles are typically 5% to 15% of your policy limit. They are typically higher than deductibles for homeowners insurance policies.
While earthquake insurance can be expensive, especially in high-risk areas, you can reduce your premiums by taking precautions. For example, the CEA provides a discount for older wood-framed homes with raised or other non-slab foundations. Many providers also provide discounts for homes that have been seismically retrofitted.
California Earthquake Insurance Rates by City
Earthquakes are expected to cause $6.1 billion in damage in the United States each year. From 2010 to 2015, the U.S. The California Geological Survey recorded 1,545 earthquakes of magnitude 3 or greater in the state.
Earthquake quotes differ depending on the location. In California, the closer your home is to a fault line, the higher your rate, reflecting the greater likelihood of earthquake damage and the higher cost of protecting your assets.
#1. Los Angeles
Residents in the Los Angeles neighborhoods of Echo Park, Silver Lake, and El Sereno typically pay less for earthquake insurance. Residents of Mar Vista, Culver City, and West Los Angeles typically pay more for the same level of coverage.
According to the United States Geological Survey, the county has a 60% chance of experiencing an earthquake with a magnitude of at least 6.7 in the next three decades due to the San Andreas tectonic zone and hundreds of smaller active faults. Geophysical Survey.
#2. San Diego
In San Diego, the cost of earthquake insurance ranges from $2.90 to $3.09 per thousand dollars of coverage. The annual rate for $758,000 of dwelling coverage—the median home price in San Diego—is estimated to be between $2,199 and $2,342.
The city has a 75% chance of a magnitude 7.0 or greater earthquake in the next 30 years, according to the California Earthquake Authority (CEA), and is home to over 1.4 million people as well as the Rose Canyon, Elsinore, and San Jacinto fault lines. According to the organisation, an earthquake of this magnitude would damage 45% of residential buildings.
#3. San Francisco
In San Francisco, earthquake insurance for a single-family home could range from $4.08 to $4.58 per thousand dollars of coverage. The Mission district is on the lower end of the scale, whereas Nob Hill residents are on the higher end.
Rates could be close to $6,000 per year if coverage is assumed for a median home price of $1.3 million.
The San Andreas and Hayward faults run through the greater Bay Area and the U.S. According to the Geological Survey, there is a 72% chance that an earthquake of at least magnitude 6.7 will occur within the next 30 years.
How to Buy Earthquake Insurance in California
The CEA recommends taking the following steps to purchase insurance in California.
Step 1: Assess your risk
Knowing how vulnerable your area is to earthquakes is the most important factor in determining whether you need earthquake insurance. FEMA provides seismic maps that demonstrate this. The colours on the maps represent an area’s risk levels, also known as seismic design categories.
Step 2: Request a free price quote
The cost of your policy will vary depending on several factors. The CEA’s free premium calculator can help you estimate your premium.
You will be asked a series of questions about your home, including your address, the year it was built, the amount of homeowners insurance you have, and the type of roof and foundation your home has.
The estimated monthly premium will then be displayed. If you want, you can change your deductible, personal property coverage, and loss-of-use coverage and add coverage to your policy.
A quick tip: The CEA represents roughly two-thirds of California's homeowners insurance providers. Here's a list of them.
Step 3: Contact your insurance provider
You must purchase earthquake insurance through your homeowner’s insurance company. When you receive your earthquake insurance estimate, contact your insurance agent, who will process your application.
Your provider will also handle your premium payments and policy renewals. They can also assist you in filing a claim if an earthquake damages your property.
According to the National Association of Insurance Commissioners, most insurers will not sell new policies for 30 to 60 days after an earthquake. The best time to purchase an earthquake insurance policy is before one occurs.
How much earthquake insurance do I need?
The value of your home determines the cost of earthquake insurance. Your home should be insured based on its replacement cost, as specified in your homeowners’ insurance policy.
What is the deductible for earthquake insurance?
The deductible on an earthquake insurance policy varies depending on the company, but it is typically between 10% and 20%.
What does the CEA stand for?
The California Earthquake Authority (CEA) is one of the world’s largest providers of residential earthquake insurance. The CEA is a publicly managed non-profit organization that collaborates with some of California’s top insurers to assist residents in managing earthquake-related risks and losses.
Does Car Insurance Cover Earthquake Damage?
If you have comprehensive coverage covering damage to your car that isn’t the result of a collision, your auto insurance will cover earthquake damage.
Is earthquake insurance available for renters?
Renters can purchase earthquake insurance. Because renters insurance does not cover earthquake damage, renters should purchase a separate policy to protect their personal property and help reimburse costs if their home becomes uninhabitable due to earthquake damage.
Is Earthquake Insurance Valid for Tsunamis?
Whether or not your earthquake insurance will cover damage from a tsunami depends on the direct cause of the damage. If the tsunami causes mudslides that destroy your home and possessions, your earthquake insurance may cover the costs. On the other hand, any damage caused by floodwater would necessitate purchasing a separate flood insurance policy.
Questions to Consider Before Purchasing Earthquake Insurance
What Are the Policy Limits for Earthquake Insurance?
Your insurance company will determine the maximum amount of coverage you can purchase, but keep an eye on the coverage limits. For example, if you purchase an earthquake policy with only $100,000 of dwelling coverage, you may not be able to rebuild your home if it is destroyed.
What Is the Deductible for Earthquake Insurance?
Earthquake insurance policies can have high deductibles (the amount you must pay out of pocket for repairs if you file a claim). The deductible could range from 10% to 25% of the policy limit for the dwelling. If your dwelling policy has a $100,000 limit, you could be responsible for paying $10,000 to $25,000 if you file a claim.
What Are Earthquake Insurance’s “Special Limits”?
Earthquake insurance policies frequently include special limits on how much the insurer will pay to replace or repair specific items or structures. For example, we discovered a policy that only paid $500 to replace a computer and another that only pays up to $1,000 for felled tree removal (and no more than $500 to remove any one tree), regardless of how many trees fell. Some policies exclude coverage for damage to a swimming pool or the deck that surrounds it.
What Should I Do Following an Earthquake?
If an earthquake has occurred in your area, there are several steps you can take:
- Obtain emergency instructions from a reliable source (radio, television, or the internet).
- Expect aftershocks, which can occur hours, weeks, days, or even months after an earthquake.
- Examine utility lines and appliances for any damage. Open the windows and turn off the main gas valve if you smell gas. To prevent a power surge, turn off your home’s circuit breaker if your power goes on and off.
- Examine your chimney for cracks and other damage.
- If your home has been damaged, take precautions to prevent further damage (for example, board up windows to prevent theft).
- Call your insurance company to inquire about coverage and to file a claim.
- Locate your home inventory (if one exists).
- Keep receipts for living expenses such as lodging and restaurant meals if you are forced to relocate due to damage.
- Hiring a public insurance adjuster to assist with large claims, such as managing paperwork and meeting deadlines.
How Can I Get Earthquake Insurance?
If you already have homeowners insurance, contact your agent to see if earthquake insurance can be added as an endorsement. If earthquake insurance is not available as an endorsement, you may be able to purchase it as a stand-alone policy from another company.
You can also inquire with your state insurance department about “surplus lines,” which are companies that have the authority to sell insurance to cover risks such as earthquakes when other insurance companies will not. Keep in mind that most insurers will not sell earthquake insurance if an earthquake has occurred within the last 30 to 60 days.
How do I get earthquake insurance in California?
CEA earthquake insurance is available in California through home and renters insurance companies.
Your homeowner’s insurance company is required by California law to offer you earthquake insurance when you purchase your policy and then every other year. You will have 30 days from the date of their written notice to respond. If you missed the notice, contact your homeowners insurance agent and request earthquake coverage.
If you own a condo or rent, you can buy earthquake insurance to cover your personal belongings and additional living expenses if you cannot live in your home due to earthquake damage covered by your policy.
What is an earthquake insurance deductible?
A deductible is the amount of money you must pay out of pocket if you need to file an insurance claim. In general, earthquake insurance deductibles range between 10% and 25% of the policy limit. For example, if you have $250,000 in dwelling coverage and a 10% deductible, you would be required to pay $25,000 for repairs before the insurance would begin to pay.
The California Earthquake Authority provides the following deductible options: 5%, 10%, 15%, 20%, or 25%.
Is earthquake insurance worth it?
If you live in an earthquake-prone area, you should think about the benefits and drawbacks of earthquake insurance. So, start by considering whether you could afford to rebuild your home and replace your personal belongings in the event of an earthquake without insurance. Keep in mind that home insurance does not cover earthquake damage.
On the other hand, the federal government’s disaster relief efforts are limited. Grants for home repairs are intended to cover only the necessary repairs to make your home safe and clean, not to restore it to its original condition. Additional federal financial assistance is frequently in the form of repayable loans.
Many people consider earthquake insurance to be prohibitively expensive, especially given the high deductibles that they would have to cover anyway. Insurance will not pay out if the amount of earthquake damage is less than your deductible. Only you can determine whether earthquake insurance is a good investment based on the potential payout.
Is earthquake coverage included in standard homeowners insurance?
No, earthquakes are not covered by standard homeowners insurance. You must purchase an endorsement for your home insurance policy or a separate earthquake insurance policy.