Earthquake insurance guide
Fact-checked with HomeInsurance.com
Earthquakes are to west coasters as tornadoes are to midwesterners. Earthquakes can happen anywhere, but there are patterns that predict where earthquakes are most likely which can help you determine whether earthquake insurance is necessary for you or not. If you live in an earthquake-prone area, like the west coast, earthquake insurance is an absolute must.
Regardless of where you live, earthquake insurance is rarely included as part of a standard homeowners insurance policy. In this guide, we’ve covered everything you need to know about earthquake insurance.
What is earthquake insurance?
Earthquake insurance is an endorsement or rider you add to your standard homeowners insurance policy that covers damages that are specifically related to earthquakes. For example, if your home experiences an earthquake and that seismic activity causes a crack in your foundation, your earthquake endorsement will cover the damage (after you pay your deductible). Without this type of coverage, you would be out thousands of dollars in repairs or stuck with a cracked foundation that reduces your home’s value and could be unsafe.
Earthquake insurance may cover a variety of earthquake-related damages, depending on your specific policy. It may also cover personal property up to a coverage limit, repairs and additional living expenses if you have to live elsewhere during repairs.
Who needs earthquake insurance?
In an NAIC report updated in 2020, they state that according to the United State Geological Survey (USGS), nearly half of all Americans across 48 states are at some level of risk for damage from an earthquake. Studies show, though, that some states are definitely more prone to earthquakes than others. If you live in a state prone to even small-magnitude earthquakes, we recommend speaking with your insurance agent about an earthquake endorsement to minimize your risk of loss if one occurs.
States most prone to earthquakes
A staggering 81% of the planet’s largest earthquakes occur along the circum-Pacific seismic belt, found along the rim of the Pacific Ocean. This means states like California, Oregon, Washington and Alaska are most likely to experience earthquakes. According to the USGS, California and Alaska have the most natural earthquakes and California has the most damaging. Other states that experience earthquakes more frequently are Oklahoma, Nevada and Wyoming. Earthquake activity varies by year, but all of these states seem to have more frequent earthquakes than others.
|State||Number of earthquakes|
States least prone to earthquakes
Small earthquakes can occur anywhere, no matter where in the world you are located. In the U.S. Florida and North Dakota have the fewest earthquakes when considering many years of history. However, if we look at the data over a five year period, there are many states who experienced no earthquakes in that time period. Some of those include Delaware, Georgia, Iowa, Massachusetts, New Jersey, Pennsylvania and Rhode Island. Other states, like Kentucky and Tennessee, experienced a couple of very low magnitude earthquakes that did not result in damage.
When earthquake insurance is worth it
Earthquake insurance is essential if:
- You live near an active fault line
- You do not have enough money in savings to rebuild your home in the event of earthquake destruction
- Your homeowners policy does not cover earthquake-related damages
While some homes, like brick or stone, are more susceptible to earthquake damage, any home located near a fault line is at risk. If your home is located near an active fault line, earthquake insurance is worth it. It may seem pricey to pay for a “what-if” but it will be much less expensive than paying to rebuild your home.
When earthquake insurance isn’t worth it
It might not be worth it to purchase earthquake insurance if:
- You do not live near an active fault line
- You have sufficient funds to cover any possible damages to your home
There are some areas where the risk of an earthquake is statistically so low, it does not make sense to pay the price tag for earthquake insurance.
Earthquake insurance coverage
Earthquake insurance coverage varies depending on the insurance company, location of the property, construction type of the property and more. However, the typical earthquake endorsement will include:
- Dwelling coverage: This coverage accounts for the rebuild or repair cost of the home and other structures on the property in the event of earthquake damages.
- Personal property: If your personal property, like furniture, electronics or other valuables are damaged in an earthquake, this has you covered up to certain limits.
- Additional living expenses: This coverage pays additional living expense costs needed if you are required to live elsewhere temporarily due to earthquake damage to your home.
Depending on your insurer, there may be additional coverages available to you under an earthquake endorsement.
How much is earthquake insurance?
According to insurer USAA, the average cost of earthquake insurance is between $100-$300 per year. However, the average takes into account all states, even those where the earthquake risk is very low. In high-risk states, like Alaska, California, Oregon and Washington, the premiums are also higher, at an average of $800 per year.
It is also important to take into account the deductible for earthquake insurance. Your earthquake endorsement will have a separate deductible since it’s a separate policy from your standard homeowners insurance. This deductible is typically determined as a percentage of your home’s insured value. For example, if your earthquake deductible is 15% of your home’s value of $300,000, your deductible will be $45,000. That is not pocket change, but it is far cheaper than having to spend $300,000 or more to rebuild your home.
How to get earthquake insurance
Getting earthquake insurance starts with a call to your insurance company or a visit to their website to inquire. With the information we’ve shared here, you can be equipped with the questions you need them to answer like:
- What does it cover?
- What does it not cover?
- How much is the premium?
- What are the deductible options?
- What is the time period for earthquake coverage after an earthquake occurs?
- Am I eligible for any discounts?
Once you have all your questions answered, the insurance agent will send you over an endorsement to sign to make your earthquake insurance official.
Earthquake insurance is worth it if you live in a high-risk area
- Earthquake insurance is not included in standard homeowners insurance but must, instead, be purchased as a separate rider.
- States located near fault lines (California, Alaska, Oklahoma, etc.) are more likely to experience earthquakes.
- You should consider purchasing earthquake insurance if you live near a fault-line or high risk area.
We don’t think the unthinkable will happen until it does. But the very essence of insurance is to help us be prepared for the unthinkable and to lower our financial burden of losses. Earthquake insurance is no exception. Adding an earthquake endorsement to your homeowners insurance policy will help to protect you from minor or catastrophic losses resulting from an earthquake. Being out $100 to $800 each year is much more favorable than rebuilding your entire home out of pocket. Additionally, if you have a mortgage, the mortgage company must be paid whether the home is destroyed or not.
If you live near an active fault line or in a high or moderate risk area, earthquake insurance may be essential to your peace of mind.