You might be surprised to learn that most home insurance policies don’t cover earthquakes. You might even shrug it off, thinking earthquakes are rare — but about 90% of U.S. residents live in areas that have earthquakes. Fewer than 8% of homeowners have coverage for quakes. That's why it's so important to know about the best earthquake insurance. Here’s what to consider when shopping for earthquake insurance.
Quick Look: The Best Earthquake Insurance
What is Earthquake Insurance?
Earthquake insurance is coverage specifically designed to cover damage from earthquakes.
A standard homeowners insurance policy excludes coverage for quakes and other forms of land movement, leaving a gap in coverage. In some cases, you can add quake coverage as a rider to your existing home insurance policy. In other cases, you may need to purchase a separate policy to guard against earthquakes.
Earthquake Insurance vs. Home Insurance
Most newer home insurance policies are HO-3 policies. For dwelling coverage, these policies provide protection against all risks, referred to as perils. But there’s a catch — and it can be a big one. All policies also come with a list of excluded perils, which typically include things like floods, neglect, and yes, earthquakes.
This means most risks to your home are covered by your policy, including fires caused by earthquakes. But expect to find earthquakes and other forms of land movement among the exclusions on your policy.
Earthquake insurance, either as an add-on to an existing policy or as a stand-alone policy, provides coverage specifically for earthquakes, and typically comes with coverage exclusions of its own, such as sinkholes, for example. Earthquake insurance does, however, patch a hole in a standard homeowners insurance policy. It provides earthquake coverage for your home, your belongings and other structures on your property.
What Earthquake Insurance Covers
Earthquake insurance covers 3 main categories of loss:
- Dwelling coverage
- Personal property coverage
- Additional living expenses coverage
Dwelling coverage, which covers the cost to repair or rebuild your home. As an extension to dwelling coverage, other structures on your property may be covered as well.
Personal property, which consists of belongings not attached to your home, such as furniture, clothing, electronics, and other household items, is also covered specifically for damage caused by earthquakes.
Additional living expenses, referred to as loss of use. If your home is damaged by an earthquake and it's determined that there is structural damage, you can expect to be displaced temporarily — and perhaps for a long time — while your home is being repaired or rebuilt. Additional living expenses coverage help cover the cost of temporary housing arrangements and may also help cover the cost of other related expenses, like the extra cost of eating out.
Average Cost of Earthquake Insurance
The cost of earthquake insurance can range from $0.50 for $1,000 of coverage up to $15 for $1,000 of coverage, with several individual or regional risk-based factors that can affect premiums.
Factors That Determine Your Insurance Cost
- Premium
- Deductible
Premiums
Not unlike your home insurance policy, some of the primary factors that determine premiums for earthquake insurance are the insured value of your home and the risk of a loss. Larger homes or homes that are more costly to rebuild may see higher premiums than those for smaller homes. The same may be true for homes in high-risk areas when compared to premiums for homes in lower-risk areas.
Earthquake insurance premiums are calculated using a cost per $1,000 of coverage, with those costs affected by the region's risk of quakes, your home’s construction type or age and your home's insured value.
Deductibles
Your deductible also plays a role in the cost of earthquake insurance. Most insurers use a percentage-based deductible for earthquake coverage, which means that if you have a covered loss, a deductible equal to a fixed percentage of your home’s covered value will be subtracted from your claim payment.
Deductibles can range between 2% up to 20% of the home’s rebuild value. For example, a home insured for $500,000 with a 10% deductible makes the homeowner responsible for $50,000 toward the home’s repair after an earthquake. Examine the deductible carefully when choosing coverage because if you aren't able to cover the deductible, you may not be able to repair your home.
How to Get Earthquake Insurance
Some insurers offer earthquake insurance as an endorsement to your existing home insurance policy.
If you’re in California, your agent can assist you with getting coverage or you can choose one of our top picks to get started.
If you live in another state, you can also start with our top picks. You can contact your existing insurer to see if they offer an earthquake insurance rider for your policy. Know that you may not find this option from all insurers or in all areas. Insurance is regulated at the state level so your options may vary even if coverage is offered elsewhere in the country. You might also find some additional providers through your state insurance department or local independent agents.
The Best Earthquake Insurance Companies
If you decide you need earthquake coverage, check out some of our picks for the best companies below.
What to look for in an earthquake insurance company
As with most types of insurance, you’ll want to compare coverage options for the companies you’re considering.
Flexible deductible options. High deductibles are probably the biggest reason more at-risk homes aren’t covered by earthquake insurance.
Typically, earthquake insurance deductibles are structured as a percentage of the home’s insured value. If one insurer offers a 5% deductible and another insurer requires a 10% deductible, the difference in compensation if you have a claim can be considerable.
Masonry coverage. Many earthquake insurance policies or riders don't include coverage for damage to masonry or veneer. In effect, this policy exclusion works like a second deductible wherein the cost of repairing the masonry as well as your deductible are both subtracted from the claim payment.
Masonry coverage. Hopefully, you'll never need to make a claim but you'll want to choose a company that's financially sound because a claim may happen years or even decades from now.
Earthquake claims also tend to affect entire areas as opposed to individual homes, which can drive up claim costs for insurers, testing their financial strength. Check your insurer's financial ratings with A.M. Best, Moody’s or other reliable financial rating institutions.
Top Earthquake Insurance Providers
Some of the best earthquake insurance providers are also among the best home insurance providers, which is a good thing for homeowners.
Combining both coverages with one insurer simplifies the conversation, making it easy to match insured values for both home insurance and earthquake insurance and simplifying the claims process as well.
- Ratings, price and customization
1. Lemonade
Like other insurance companies, Lemonade doesn’t cover damage from floods or earthquakes within it's base homeowners insurance. However, California residents can buy a separate earthquake policy from Lemonade. This add-on policy is available to both renters and homeowners in California.
Lemonade's earthquake insurance policy covers the following:
- Damage to your home and extended structures with dwelling coverage
- Reimbursement for the cost of damaged property with personal property coverage
- Additional expenses you may take on if you can't stay at your house with loss of use coverage
Your policy won't cover flood damage, sinkholes, damage to your car or other vehicles or fire, although your traditional home insurance policy or other add-ons may.
Want to learn more? Read Benzinga's full Lemonade Home Insurance Review.
2. Amica
If you're lucky enough to live in one of the 49 states in which Amica offers coverage — all but Hawaii — this century-old provider is worth a closer look.
Amica is well-regarded within the industry and known for its complete coverage, including options that may not be available from some other insurers, like personal property replacement coverage which ensures your belongings for their full replacement value without taking a deduction for depreciation.
Catastrophic coverages are available as well, including coverage for earthquakes or floods. In the 2018 J.D. Power customer satisfaction survey of homeowners insurance providers, Amica bested the competition, earning the only 5-star rating.
Read Benzinga's full Amica Home Insurance Review
3. PURE Insurance
Catering to the needs of affluent households and the coverage considerations for multi-million dollar homes, PURE Insurance is known for the scope of its coverage.
Where policies from some well-known insurers leave coverage gaps, PURE usually has a well-crafted solution in place and is accustomed to working with valuable homes and high-net-worth households.
PURE may be a bit selective in the homes it chooses to insure, possibly declining coverage for homes at higher risk of brush fires, but if you have a valuable home, this insurer should be on your shopping list, along with other high-end competitors like Chubb and AIG.
Both flood insurance and earthquake coverage are offered through PURE, but availability may vary by area. In California, where only 10% of homeowners purchase earthquake insurance, PURE boasts a coverage rate of 46% for the homes it insures in the state.
3. Farmers
You may know Farmers Insurance by the insurer's amusing commercials, but Farmers is actually part of a large group of insurance companies, which allows this insurance provider to find coverage for nearly any risk.
With 3 home insurance plans to choose from, Farmers has a coverage solution to fit any budget and difficult-to-insure properties can often be insured through any of Farmers’ partner companies.
Extra policy features can reduce the cost of coverage, including declining deductibles, claims-free discounts, claim forgiveness and discounts available for bundling multiple policies with Farmers.
Earthquake coverage may not be available in all states but is available in California, where the risk may be highest. Contact your Farmers' agent to learn more about your coverage options.
Choose the Best Earthquake Insurance
Earthquake insurance isn't for everyone. In some areas, the lower risk may not merit the cost of coverage. For example, in New Jersey, during a 5-year period, for every $1 of earthquake insurance premium collected, only three-tenths of a cent was paid out in covered losses.
However, in other parts of the country, the risk of damage from an earthquake is much larger and earthquake insurance can help protect the largest single investment many households will ever make: your home.
If you want to learn more about insurance, check out Benzinga's guide to the best homeowners insurance, best fire insurance and best flood insurance.
Frequently Asked Questions
1) Q: What are the most common types of home insurance claims?
Wind and hail claims top the list with nearly 40% of all home insurance claims due to these two acts of nature. Fire and lightning are the second most common, but claims due to fire tend to much bigger than claims dues to other types of risk. The possibility of a total loss is why it’s so important to insure your home for the full cost of rebuilding. Get a custom quote today.
2) Q: I’m selling my house. When should I cancel my home insurance?
Most agents will recommend that you keep coverage in place until the day after your closing. Home insurance policies usually have an effective date and time that begins and ends at 12:01 AM. This means a policy that expires on the 1st of the month is only insured for 1 minute of that month. Keeping your policy in effect until after your closing ensures that the home you are selling is still insured.
3) Q: What should I do if my home is damaged?
For any major damage, you should contact your insurer or agent as soon as you can. As part of a home insurance policy, you agree to notify the insurer of any claims in a timely manner. Your insurer can arrange for remediation if needed, which may include boarding up windows, roof tarps, and other measures. Take action to reduce the damage if you can do so safely. An example might be turning off the water supply if you have a burst pipe.