Why Do I Need Earthquake Insurance?
Most homeowners, mobilehome, condo, and renters policies don’t cover earthquake damage.
There are 2,000 known faults crisscrossing California, and on average, according to the official California Multihazard Mitigation Plan:
- Moderate earthquakes (magnitude 5.5) hit California 3 to 4 times a year.
- A strong earthquake (magnitude 6 to 6.9) hits California every 2 to 3 years.
- A major earthquake (magnitude 7 to 7.9) hits California about every 10 years.
Will I be able to rely on the government to bail me out after an earthquake?
Not always. Today, even if a resident qualifies for a disaster grant, it may not cover the cost to repair or rebuild. Disaster loans, if available, are limited and must be repaid—their intent is to help you get back into your home, not to offer enough funds for you to rebuild or fully replace your property. After the August 2014 South Napa Earthquake, federal assistance for individuals wasn’t offered for nearly two months after the quake hit.
I own my condo. Are there coverage options for me?
Condo owners have unique needs. Condo association master earthquake policies usually don’t cover damage to your personal belongings or damage to the inside of your home. And while some associations may cover earthquake damage to a condo building’s exterior, many also require owners to pay a portion of the repair costs or the association’s policy deductible (known as a Loss Assessment).
I rent, so will my landlord’s policy cover my belongings?
No. If you rent, you need a separate renters policy for your own personal belongings. Renters earthquake insurance insures personal property such as TVs and furniture with a flat $750 deductible, and covers additional living expenses up to $25,000 with no deductible. Beginning January 1, 2016, you’ll be able to choose from 5, 10, 15, 20 and 25 percent deductibles. And you will be able to choose additional living expense coverage of up to $100,000, still with no deductible.
Do you offer any discounts if my home has been earthquake retrofitted?
Yes. CEA policyholders who have retrofitted their house to withstand earthquake damage will receive a 5 percent premium discount if their house meet the following requirements:
- Built before 1979.
- Wood-frame construction-type.
- Built on a raised foundation.
- Frame is bolted to the foundation.
- Home has cripple walls, and they are braced with plywood or its equivalent.
- Water heater is secured to the building frame.
- Homes built on a concrete-slab or combination-type foundation do not qualify.
Beginning January 1, 2016, select retrofitted houses may qualify for up to a 20 percent Hazard Reduction Discount on their policy premium.
How likely is it that your home will be damaged in an earthquake?
- Consider your home’s distance to fault lines.
How close is your property to a fault line or fault line system? Visit the United States Geological Survey’s interactive fault map which illustrates faults that were believed to be sources of earthquakes of magnitude 6 or greater and know that new faults continue to be discovered. Don’t forget the August 2014 Napa quake surprised both residents and earthquake research experts alike, since this major fault in a highly populated area was not previously known to exist.
- Consider your property’s construction features.
Wood frame homes with crawlspaces, multi-level homes and older homes have a higher risk of suffering severe damage from a large magnitude earthquake. Typically, newer homes or homes that are retrofitted to withstand an earthquake will suffer less damage. However, even homes retrofitted to meet the most recent code requirements may suffer damage from a strong quake.
Can you afford to repair or rebuild your home if it’s severely damaged?
Without insurance, you may face a heavy financial burden if your home is severely damaged in an earthquake since typical homeowners policies do not protect against this peril. In the process of waiting for any assistance, you may also need to find somewhere to live and some way to pay unexpected living expenses out of pocket.
Can you afford to live somewhere else while your home is being repaired?
If a large-magnitude earthquake strikes your area, leaving your home uninhabitable, where will you go? Will you be able to afford a place to stay until you are back on your feet? At a time when lodging and housing prices will skyrocket if a large earthquake wipes out a populated area, this could prove to be very difficult. Earthquake insurance policies can also provides coverage for Additional Living Expenses to help with increased housing expenses following a catastrophic event.
Can you afford to lose all your equity in an instant?
If you live in an earthquake prone area, you are taking a huge risk of losing all of your equity if your home remains unprotected by earthquake insurance. Do you really want to gamble with your future? It takes just a few minutes to get a quote and purchase earthquake insurance policy online from the leading provider of stand alone residential earthquake insurance.
Will the government “FEMA” help bail me out after an earthquake?
Many homeowners think the government will be there to cover the financial burden when their home is a total loss due to a catastrophe. While FEMA is designed to offer individuals emergency assistance after a large catastrophic event, they are not going to repay all the equity lost to homeowners who suffered major losses. If you are faced with this devastating situation, you may be lucky to receive financial assistance in the form of government loans to help get you back on your feet, but these loans only provide a maximum of $200k with a long delay in receiving funds, must be repaid, and may come with tax implications. You will still be without the equity you worked so long and hard to earn, and be forced to face the fact that you must start rebuilding your financial nest egg from scratch.
My home is newer so it’s not at risk of being damaged, should I be worried?
All structures are at risk of experiencing severe structural damage during a major earthquake. A large magnitude earthquake 7.0 or greater is capable of causing billions of dollars in damage, regardless of how new your home is or how much retrofitting was in place. The more efforts you put into protecting your home from damage caused by the ground shaking, the higher the chances that your property will stand strong during small and medium sized shockers. However, there is never a guarantee that any structure will survive a large magnitude earthquake, no matter what year it was built.