What Does Earthquake Insurance Cover? —Why You Need It
Earthquakes' potential to create catastrophic destruction makes them mysterious and intriguing, especially since we have no accurate way to predict them. This pushes homeowners to get earthquake insurance for their peace of mind. Now the real question is, what does earthquake insurance cover? In this article, we will give a step-by-step guide on earthquake insurance and what it covers.
What is an Earthquake Insurance?
Earthquake insurance is just like reimbursement for the damages caused by earthquakes to your homes, personal property, or temporary living arrangements. It is available in most states as an add-on to your policy, or you can purchase it from an insurance carrier that specializes in selling earthquake coverage.
Do I Need an Earthquake Insurance?
Earthquake insurance is not at all mandatory. Though quakes can happen in all 50 states of the US, some places are more prone to them. Thus, in these cases, earthquake insurance becomes a more valuable commodity.
In most Western states, residents are becoming well aware of the risks of earthquakes and the need for insurance. But, other regions, everyday earthquake activities may come as a surprise.
One massive earthquake can be devastating, and perhaps you can't afford to repair your home and replace all your belongings at ones. This is where earthquake insurance comes in.
Where to Get an Earthquake Insurance
If you're in the look for earthquake insurance, check out with your current homeowners or insurance company. Ask them whether they offer either an add-on to your policy or stand-alone earthquake policy.
If you live somewhere else and your present insurer does not offer insurance, you'll need to shop around.
They will help you in the right direction. The website of your state's Department of Insurance can also be a source for both big and small licensed earthquake insurers.
How Much Coverage Do You Need?
If you are an insurer usually sets limits on coverage for both home and earthquake insurance. If you are a renter, you need not worry about house coverage. Your initial personal property coverage limit may be set on the low side for about $5,000 or 10% of your coverage. But you can raise this amount higher to your insurer's maximum. However, there may be caps as to how much your insurer will pay for one item.
Earthquake Insurance Deductibles
Compared to home insurance, earthquake policies contain a steep deductible, which is the amount subtracted from your claim payment. Insurers will deduct between 10% and 20% of your dwelling coverage limit.
Another difference is that while home insurance often has one deductible that applies to most of your structures and possessions, some earthquake insurance companies use separate deductibles for each part of the policy: dwelling and personal property.
What Does an Earthquake Insurance Cover?
In case of an earthquake, your policy will cover:
- Dwelling coverage: These are damage repairs to your home and extended structures, like your swimming pool or a garage.
- Personal property coverage: These are reimbursements for your damaged property costs.
- Loss of use coverage: These are any additional expenses you might need, like staying in a hotel if you can't stay home.
Your earthquake insurance policy probably won't cover damages due to floods, sinkholes, vehicle damages, and fires.
How Much is an Earthquake Insurance?
Earthquake insurance costs an average cost of $800 per year in the US. The price of an earthquake insurance policy depends on your coverage limits, deductibles, and several other factors, including zip code, the age of your home, distance to a fault line, your house materials, and how much it costs to rebuild your home.
Is Earthquake Insurance Worth It?
Other people argue that the high price of deductibles and premiums can make earthquake insurance costly and, therefore, not worth your money.
To know whether or not an earthquake insurance policy is worth it, start by discovering the potential risks of where you live.
The potential costs of earthquake-related damages have steadily increased as buildings structures get older, and more urban developments are popping up, especially in areas where the risk for earthquakes is high.
Even though earthquakes present a severe threat in several states, earthquake insurance — and how to go about getting it — can be a bit mystifying. We hope that through this article, you were able to get a good idea about earthquake insurance, and what does earthquake insurance cover.
If you don't have the money to rebuild your home, repurchase your belongings, or pay for temporary living costs after an earthquake, then you should think about purchasing an earthquake insurance policy now.
April 17, 2020
by: Adam Lochner
Regardless of where you live, you can unexpectedly experience severe weather conditions. Natural hazards such as damaging winds, hurricanes, tornadoes, large hail, and flash flooding can put you and your family’s life in great danger.