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Earthquake Insurance

While many people purchase homeowner’s insurance to cover the various disasters that can strike their property, this kind of policy rarely covers damage associated with earthquakes. Since earthquake insurance is optional even for those living in high risk areas, many people find themselves paying out of pocket when tremors cause damage to their house.

What Kind of Damage Does an Earthquake Policy Cover?

Earthquake insurance policies often cover three basic types of expenses: damage to the home, loss of personal property and additional living expenses. The first category is often the most important for homeowners, since earthquakes can cause near complete destruction of a house. The policy compensates the owner for the lost value of their home minus a deductible, which is usually a percentage of maximum payout limit.

The second category of coverage is similar to renter’s and homeowner’s policies in that it compensates the property owner for lost possessions. This includes electronics, appliances and furniture, although your provider may require proof of ownership and value to proceed with the claim. Some types of insurance also cover expenses for temporary lodging incurred while the policy holder is waiting for their home is being repaired following an earthquake.

This type of insurance may only compensate for damage directly caused by the earthquake. Destabilization of the foundation and cracked walls would be covered, but not a fire or water damage that was indirectly caused by the tremors. Talk to your insurer to learn more about the specific items covered by their plan.

Is Earthquake Coverage Right For You?

Homeowners are not required to get this type of coverage by law, so it is usually up to them to decide if it is right for them. Those who own property in areas that are at high risk of experiencing strong earthquakes, like the California coast and parts of the Midwest, are advised to carefully consider protecting their finances. However, nearly every region in North America has been impacted by earthquakes in the past, so virtually every property can be damaged by seismic activity.






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