How Much Does Earthquake Insurance Cost?

If you live in an area that is bound to have earthquakes, you’re more than like going to want to protect your valuable assets such as your home and the belongings inside.  Since many policies don’t include an earthquake policy, this will have to be purchased separately.

How much is it?

• The cost of earthquake insurance will depend on the geographical area, the age of your home, the number of stories in your home, the soil type, the deductible you choose, the company and if you choose to add premiums.  The average price is about $2,000 to $5,000 per year for the average 1,600 square foot home.  Again, based on the factors mentioned prior, if your home was located near the San Andreas Fault, you would pay more than a home nowhere near it.
• For example, according to UtahEarthquakeInsurance.com, if you had a home worth $200,000, you may pay around $28 per month extra with their policy.
• In a state, such as California, where earthquakes are quite common, the average bill can vary from $450 to $3,500 a year, depending on the size of your home, the structure and company you choose.
• The California Earthquake Authority has a simple calculator you can use to get a fairly accurate quote.  For instance, we ran a sample test for a random home located in San Francisco.  For about $1,000 per year, we could insure a 25-year-old home with a $500,000 value, including $50,000 of personal property coverage and $1,500 of loss of use.
• We are able to gather a bunch of quotes in random cities across the Internet and came up with the following prices:

What is going to be included?

• Various options are available, giving homeowners flexibility with their decision.  For example, homeowners may insure their structure and set a deductible.  Aside from this, homeowners can choose to insure both the structure and the belongings inside.  Most deductibles will be 10 to 20 percent of the dwelling coverage before the insurance companies pay.  Insurance companies may set a limit on how much coverage they cover.  For example, if you have $300,000 in coverage with a 20 percent deductible, you would be responsible for $60,000.
• If you’re in the market to purchase this type of policy, talk with your current homeowners insurance company to see what it would cost to add this premium.  If you live in an area where this insurance isn’t available, your insurance company should point you in the right direction, or you can head to your state’s Department of Insurance website.
• Earthquake insurance will pay for repairs, your personal belongings and additional living expenses.  However, it won’t cover fires caused by an earthquake, floods, vehicle damage, sinkholes or any masonry.

What are the extra costs?

• Be aware of your other fees on your homeowner’s policy.  Earthquake insurance is only a premium option you can add onto your existing homeowner’s policy.
• The lower the deductible is on your plan, the more you’re going to pay in premiums.
• Optional coverage, such as building code upgrades, land restoration, and emergency repairs, can add to the policy.

Tips to know

• In California, only nine percent of homeowners carry an earthquake policy.  The reason?  Since Californians haven’t experienced a major earthquake in more than two decades, most find the policy to be too expensive and it to be compared to a catastrophic medical insurance policy.
• To determine your home’s risk profile, there are a few things you can do.  For starters, know how close your home is to a fault line.  The closer it is, the more you’re going to pay.  Next, know whether your home is on bedrock or fill; you will also want to know the structure’s construction material.
• Homeowners insurance policies won’t cover earthquake damage unless you add this add-on.  The same can be said about renter’s insurance.  Renters, if they want their belongings covered, will have to pay the premium as well.  With a condo association, the association can insure the entire complex or each individual owner can do the same.  Additionally, the HOA can insure against any assessments due to a loss because of an earthquake.
• While banks require homeowners to receive flood insurance in a flood zone, earthquake insurance isn’t required, even if you live in an earthquake zone.
• A common misconception by many thinks the government can help them in the case of an earthquake.  While the government can help with a payment, it will be no different than a loan you would get at a local bank.

Earthquake risk

source: earthquake.usgs.gov

How can I save money?

• The higher your deductibles are, the more you’re going to be able to save.  Pick a deductible you’re comfortable with paying in case an earthquake were to happen.
• Compare policies with at least three to five companies.  By doing so, you should be able to save a little bit of money.
• Do you need insurance?  Take a look at the picture above and pay close attention to the area you live in.  Is it a high hazard or low?  If you’re in a higher-risk area, you may want to consider it.
• Consider strengthening your house against future earthquakes.  California, for instance, offers mitigation assitance to help you with this.

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