Do You Need Earthquake Insurance?

Are you adequately protected in the event of an earthquake? Homeowners should consider this as the main concern as part of their protection plan. All too often, homeowners lack protection against earthquake damage, as they assume it is part of their standard homeowner's insurance coverage and forgo coverage to save money. Also, contrary to popular belief, earthquakes can happen pretty much anytime, anywhere. These shakes may lead to costly and even catastrophic damage to your home. Here's how to determine if earthquake insurance is right for you.

The Ins and Outs of Earthquake Insurance

First, it is crucial to understand how this coverage works to know if it is right for you and your home if an earthquake causes damage to it. This protection is not included in your standard homeowners or renters insurance. If an earthquake damages your home and you are not equipped with earthquake insurance, you will most likely have to cover those costs out of pocket to make the necessary repairs. For properties that are at high risk for earthquakes, consider your unique exposures and your net worth value. Keep in mind that what your earthquake insurance will specifically cover depends on your individual policy. Generally, the policy is made of three parts:

Dwelling coverage

Helps cover the repair costs or expenses to rebuild the home.

Personal property coverage

Replaces damaged personal items (i.e. furniture or TVs).

Loss of use coverage

Covers temporary, additional living expenses if necessary while the home is being repaired. You may be able to include a code upgrade coverage, meaning if the home rebuild is at an increased cost due to the original structure not being compliant with current building codes, the coverage can help with the added expenses. You can consult with your insurer about any other types of riders that are offered. Earthquakes can cause a wide variety of problems that cause other issues. Ensure you have a well-rounded broad coverage plan, as earthquake insurance doesn't cover all damage caused by an earthquake, such as a pipe break leading to a flood or damage to your vehicle.

Am I a Good Candidate for Earthquake Insurance?

It is up to you how much earthquake coverage you purchase, and your premium will be based on the factors relating to the home itself (i.e., its age and proximity to known faults). Factors to consider when deciding whether to purchase earthquake insurance:
  • Proximity to active faults
  • Frequency of earthquakes in your location
  • When the last earthquake occurred
  • Your home's layout, materials used, and quality
  • The type of soil and the slope of the land your home is on
  • Annual rainfall percentage
  • Home and contents value
  • The cost to insure the home
These questions boil down to determining the likelihood that an earthquake will happen, if it would damage your home and if you are able to afford the home repair after an earthquake without the help of insurance. Note that it only takes one big earthquake to cause catastrophic damage to your home.

Other Considerations

If you don't own your place, that doesn't mean you shouldn't insure your possessions. During a strong earthquake, items shift around and can potentially become damaged. What if your TV or computer is thrown to the ground? Or what if you were forced to leave your rental while repairs are made after an earthquake? Are you prepared to cover those additional temporary living arrangements? Renter's earthquake insurance can help you with those associated expenses after an earthquake as a renter. Your homeowner's insurer can help you figure out if earthquake insurance makes sense for you. Do you need earthquake insurance if you do not live in a high-risk zone? The coverage is still recommended as it can happen. If major earthquakes are less likely in your area, your premium will probably be cheaper. Also, both homeowners and renters may be able to qualify for discounts if you have made accommodations to your space to withstand the shaking from earthquakes better.

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we help our clients decide which of these options is best for them based on their current situation and risk factors. Contact us at 1-855-977-1842 or for a consultation!

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we help our clients decide which of these options is best for them based on their current situation and risk factors. Contact us at 1-855-977-1842 or for a consultation!

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