Earthquake Insurance in California: What You Need to Know

Living in California, earthquakes are a real concern. The state is well known for its seismic activity, and for those who own a home or business in California, earthquake insurance is a wise investment. However, not everyone knows what earthquake insurance is or how it works. That’s why we’ve put together this guide to help you understand what earthquake insurance is, why it’s important, and what you should consider when purchasing a policy.

What is Earthquake Insurance?

Earthquake insurance is a type of insurance policy that provides coverage for damages caused by earthquakes. This coverage is not typically included in standard homeowners or renters insurance policies. Instead, it must be purchased as a separate policy.

Earthquake insurance provides protection against damage to your home, personal property, and other structures on your property that are caused by an earthquake. This can include damage to the foundation of your home, walls, roof, and personal belongings. Some policies may also provide coverage for additional living expenses if your home is uninhabitable due to earthquake damage.

How Does Earthquake Insurance Work?

Earthquake insurance policies have a deductible, which is the amount of money you must pay out of pocket before your insurance coverage kicks in. The deductible for earthquake insurance policies is typically a percentage of the total coverage amount, usually ranging from 5% to 25%. This means that if your policy has a coverage limit of $200,000 and a 10% deductible, you would be responsible for paying the first $20,000 of damages before your insurance coverage would apply.

It’s important to note that earthquake insurance does not cover all types of damage. For instance, damage caused by floods, tsunamis, and landslides are typically not covered by earthquake insurance. However, you can purchase additional coverage for these types of events if they are a concern in your area.

Is Earthquake Insurance Required?

Earthquake insurance is not required by law in California. However, if you have a mortgage on your home, your lender may require you to purchase earthquake insurance. Even if your lender does not require it, it’s still a good idea to consider purchasing earthquake insurance to protect your home and personal property.

What Should You Consider When Purchasing Earthquake Insurance?

Cost

The cost of earthquake insurance can vary depending on a number of factors, such as the age and construction of your home, its location and proximity to fault lines, and the coverage amount and deductible you choose. Shop around and compare policies from different insurance providers to ensure you are getting the best value for your money.

Coverage

Make sure you understand exactly what your earthquake insurance policy covers before you purchase it. Some policies may have exclusions or limitations that could affect your coverage in the event of an earthquake. Read the policy carefully and ask your insurance provider any questions you may have.

Deductible

The deductible for earthquake insurance policies can range from 5% to 25%. Consider your financial situation and how much you would be able to afford to pay out of pocket in the event of an earthquake. A higher deductible may lower your insurance premium, but it could also mean more out-of-pocket expenses if you need to make a claim.

Insurance Provider

Not all insurance providers offer earthquake insurance, so make sure you choose a provider that does. You should also choose a provider that has a good reputation for customer service and claims handling.

FAQ

What is the California Earthquake Authority?

The California Earthquake Authority (CEA) is a publicly managed, not-for-profit organization that provides earthquake insurance to California residents. The CEA was established in 1996 after the Northridge earthquake to provide more affordable earthquake insurance options for California residents.

Do I need earthquake insurance if I rent my home?

While earthquake insurance is not required for renters, it may still be a good idea to consider purchasing a policy. Your landlord’s insurance policy will not cover your personal property in the event of an earthquake, so earthquake insurance can provide valuable protection for your belongings.

Does earthquake insurance cover damage to my car?

No, earthquake insurance typically does not cover damage to your car. However, if you have comprehensive coverage on your car insurance policy, it may cover earthquake-related damages to your vehicle.

What should I do if I experience an earthquake?

If you experience an earthquake, take the following steps:

1. Stay calm and stay inside.
2. Drop to the ground and take cover under a sturdy piece of furniture or against an interior wall.
3. Hold on until the shaking stops.
4. If you are outdoors, move away from buildings, power lines, and other structures that could fall.
5. After the shaking stops, check yourself and others for injuries and damage to your property.

Conclusion

Earthquake insurance is an important investment for California residents. Make sure you understand what earthquake insurance is, how it works, and what you should consider when purchasing a policy. With the right coverage in place, you can have peace of mind knowing that your home and personal property are protected in the event of an earthquake.