Top Earthquake Insurance Options for 2024

Depending on your location, you might consider enhancing your homeowner’s insurance policy with additional earthquake coverage. While this extra protection isn’t necessary for everyone, it can be invaluable if you live in a region prone to earthquakes, potentially saving you thousands or even tens of thousands of dollars in the event of significant damage.

To make an informed decision, it’s crucial to understand how earthquake insurance functions, what the average costs are, and the various coverage options available.

Top 5 Earthquake Insurance Providers in the U.S.

  • GeoVera
  • California Earthquake Authority
  • Amica
  • American Family
  • Chubb

Earthquake insurance isn’t typically included in a standard homeowners insurance policy, but your insurance agent should discuss adding it if you live in an earthquake-prone area like the West Coast, Alaska, Hawaii, or parts of the Midwest. For instance, in California, insurers are required by law to offer earthquake insurance through their own company or a third party.

While many major insurance companies offer earthquake insurance or endorsements, there are also specialized insurers focused on natural disaster coverage. These companies might provide the most options to tailor an earthquake insurance policy that meets your specific needs and budget.

Understanding Earthquake Insurance: What It Covers and How It Works

Earthquake insurance offers financial protection for damage resulting from earthquakes, covering both home and personal property damage as specified in your policy. It can also help with living expenses if you need to relocate due to earthquake damage. Available for homeowners, commercial property owners, and renters, earthquake insurance for renters is sold separately from standard renters insurance and generally covers only personal property.

What’s Included in Earthquake Insurance Coverage?

Most earthquake insurance policies cover three primary areas: your home, your personal belongings, and any additional living costs incurred due to the earthquake.

Dwelling

The first type of coverage protects your home itself, which generally means you’ll be compensated for the cost of rebuilding after an earthquake. This coverage can also extend to external structures such as garages, sheds, or even swimming pools.

Property

The second category is personal property coverage, which reimburses you for the replacement cost of items in your home such as furniture, clothing, and appliances. However, this coverage often comes with limits, including an overall reimbursement cap or specific caps on certain items.

For valuables like artwork, jewelry, or family heirlooms, it’s advisable to discuss with your agent. In some cases, you can “schedule” these items by purchasing additional coverage for your listed valuables.

Additional Living Expenses – Loss of Use Coverage

The final category covered by earthquake insurance is additional living expenses (ALE), also known as “loss of use” coverage. This pays for costs incurred if you’re displaced from your home, including hotel stays, meals, and parking or storage fees.

However, it’s important to note that many earthquake policies do not cover certain post-earthquake damages, such as fires, sinkholes, vehicle damage, or floods.

What is the cost of earthquake insurance?

The cost of earthquake insurance varies greatly and is influenced by several factors. On average, the annual cost is about $800, but this can fluctuate based on your specific situation. Key factors include your location, especially if you live in a high-risk area like California, Washington, or Missouri. Other considerations include the age, condition, and value of your home. Older homes and those built with brick are more likely to sustain damage, leading to higher premiums. Additionally, homes on unstable ground, with faulty foundations, or that are multi-story will also cost more to insure due to the increased risk of damage during an earthquake.

Is Earthquake Insurance Worth the Investment?

Generally, earthquake insurance is advisable if you live in a high-risk area, though it is not mandated by federal or state law. Mortgage lenders don’t require it either, even in earthquake-prone regions like Missouri’s New Madrid area or the San Francisco Bay area. In California, insurers must offer it as an optional addition. While premiums are high and paid on top of homeowners insurance, those without the financial means to rebuild should consider it, especially in one of the 16 high-risk states. Ultimately, you must weigh the cost against the potential benefit to decide on the right coverage for your home.

 

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