Despite what people may think, earthquakes are not covered under a typical homeowner’s policy. You can purchase separate earthquake insurance, but should you?
Every year, earthquakes cause the U.S. around $4.4 billion in damages. Over $3 billion of those damages occur in California alone, but other states suffer, as well. There are around 30,000 earthquakes a year with a magnitude between 2.5 and 5.4. In November 2019, Oklahoma had earthquakes with magnitudes of 2.5 and 3.6. While these seem small, even small earthquakes can cause damage. If you don’t have earthquake insurance, you’ll have to pay out of pocket to repair the damages.
What Does Earthquake Insurance Cover?
- Dwelling: Dwelling insurance covers damages to the property.
- Personal property: Personal property covers earthquake damages to your personal belongings.
- Additional living expenses (ALE): Also known as “loss of use,” additional living expenses provides monetary assistance if you must live somewhere else while your home is rebuilt or repaired.
Hazards of Earthquakes
You might wonder what damage an earthquake can really do. It’s more than just a bit of jostling. Shaking in general can cause damage, but earthquakes can also cause:
- Buildings to sink into the ground (through liquefaction)
- Flooding (covered under a separate flood insurance policy)
- Death and injury by falling objects or crumbling buildings
The hazards of earthquakes don’t always remain within one city, either. Tremors from an earthquake and its effects can spread miles.
How Much is Earthquake Insurance?
The price of earthquake insurance varies per state and per area. As you can imagine, areas with a high number of earthquakes per year see more costly earthquake insurance premiums.
On average, earthquake insurance costs around $800 a year in the US. In California, you may pay up to $5000 a year for earthquake insurance. This is both due to the risk of earth quakes and the value of the homes themselves. Keep in mind that renter’s insurance also doesn’t cover against earthquakes. While your landlord’s insurance should cover the apartment structure itself, it won’t cover your personal possessions from any damages or losses incurred from an earthquake.
Although earthquake insurance isn’t required by federal or most state laws, it may be a reasonable investment for those that live in high-risk areas. If an earthquake destroys your home, you’ll want to make sure you have enough money to live somewhere else and make repairs.
Also Read: Preparing for the Next Bid California Quake