For us Californians, earthquakes are familiar, especially those random ones in the middle of the night that wake you up (those are the worst!). Even though our state is prone to earthquakes, they are still unexpected and can be very frightening. We don’t know when they will happen, how bad they will be, or how long they will last.
Are you aware that your homeowners/condo/renters insurance policy specifically excludes any coverage for earthquake, earth movement, and the like? That’s right, your personal insurance policy (whether you are a home owner or a renter) excludes any loss due to an earthquake. We all hope “the big one” won’t happen to us, but what if it does? How are you preparing for such a loss? We can’t be 100% prepared, but we can start with looking at earthquake insurance.
Most people hear the deductible and premiums for earthquake insurance are really high. Well, that would be slightly correct. Here’s how earthquake insurance works. Say your home is currently insured at $300,000 on your homeowners policy (also know as dwelling coverage A) with a $1,000 deductible. The earthquake policy would have the same coverage A, but the deductible would read as a %, such as 10% of coverage A. Therefore, the deductible would be $30,000 (10% of coverage A). This doesn’t mean you have to pay $30,000 to the insurance company in order for them to cover anything. What it does mean is the damages from an earthquake must exceed $30,000 in order for the company to pay for damages, and they would pay the excess amount. So, if the damages were $100,000, the insurance company would subtract your deductible, and then pay for the repairs/rebuild of up to $70,000*. As far as the premiums go, they tend to be more expensive than a homeowners policy.
If you’re interested in learning more about earthquake insurance, the coverages, exclusions, rates, or would like a quote, please give us a call!
You may also visit the California Earthquake Authority at www.earthquakeauthority.com
*Less any exclusions included on the earthquake policy