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Your Guide to Buying Earthquake Insurance

  • December 21, 2018
  • Life Style Blog

Earthquakes pose serious threats in several states, earthquake insurance and the process of how to go about purchasing can be a bit mystifying. Surprisingly, there are still many homeowners who are unaware of the fact that standard home insurance does not compensate for damages caused by earthquakes. Your insurer can add earthquake insurance to your standard homeowners insurance policy at extra cost, or offer a separate policy altogether. It can also be that you have to buy earthquake insurance from another insurance agency if your current insurer does not offer that option to you.

Who needs earthquake insurance?

Any residential or commercial property owner whose property is located in areas more prone to earthquakes may consider investing on this type of insurance. Remember, it is not mandatory, but since natural calamities are unpredictable and are not restricted to any particular location, having earthquake insurance can very well be an intelligent decision you can take to show that you are not prepared to take any chances when it comes to safeguarding your financial interest.

There have been cases when earthquakes have struck in states with very rare or negligible history of seismic activity. No doubt, one earthquake can be devastating and you probably will find it near impossible to pay for rebuilding your home and replacing other belongings. That’s when earthquake insurance comes in.

Where to buy earthquake insurance?

If you’re looking to buy earthquake insurance and considering your options, start with your current homeowners insurance company. Ask if they offer this type of insurance as an add-on policy or as a separate earthquake policy.

In California, the law makes it mandatory for homeowners insurance companies to also provide earthquake coverage. You can also contact a reputable and independent insurance brokerage that is placed with several, industry-leading earthquake insurance companies to get the best coverage that matches your needs and requirements. Your State’s Department of Source is also a trusted source for finding licensed earthquake insurance policy.

How much coverage do you need?

Your insurer sets the limit for the amount of dwelling coverage you need for both earthquake and home insurance. If you’re living in a rented property then you do not need to worry about dwelling insurance.

Initially, your personal property coverage may be set on the low side, but you can raise this amount to your insurer’s maximum, though there may be caps on how much your insurer will pay for one item.

Earthquake Insurance Deductibles

Earthquake insurance policies contain a steep deductible. 20% is the amount subtracted from your claim payment. Another main difference is that a typical homeowners insurance policy has one deductible that applies to most of your structures and possessions, some companies offering earthquake insurance use separate deductibles for each part of policy. It is important to ask your possible insurers if they have one overall deductible or separate ones.

Determinants of Earthquake Insurance Policy

Rates of earthquake insurance policy depends on your coverage limits, deductible, and handful of other factors which include the age of your home, ZIP code, the number of stories in your house, rebuilding cost of home, the soil type on your property, the building materials used in your home, and your location’s proximity to seismic activities.

It’s always wise to review your insurance policy with your insurer. A knowledgeable and experienced executive can tell you what is covered and what’s not, and may suggest other policies to fill out any gaps.