Earthquakes are a fact of life in California. If you live in an area that is prone to earthquakes, you might wonder whether you need earthquake insurance.

An earthquake is an intense shaking of Earth’s surface. The shaking is caused by movements in Earth’s outermost layer. Although the Earth looks like a pretty solid place from the surface, it is extremely active just below the surface.

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The Earth’s lithosphere is made up of giant puzzle pieces called tectonic plates. Tectonic plates are constantly shifting as they drift around on the viscous, or slowly flowing, mantle layer below. Earth’s crust is fractured into tectonic plates that have been moving very slowly over the Earth’s surface for millions of years. This non-stop movement causes stress on Earth’s crust. When the stresses get too large, it leads to cracks called faults. When tectonic plates move, it also causes movements at the faults. An earthquake is the sudden movement of Earth’s crust at a fault line.

While we do know that earthquakes will happen, we do not know exactly when. We do know that they can cause a lot of damage to your home and your belongings. You may even have to move out of your home while it is repaired or rebuilt. 

Homeowners, renters, and condominium insurance policies do not cover damage from natural disasters such as earthquakes, floods, and landslides. Earthquake insurance can help pay for some of your losses.   

What is earthquake insurance and how does it work? 

Earthquake insurance is an added endorsement to your existing homeowner or renter’s policy, or a separate earthquake policy you buy. Earthquake insurance covers some of the losses and damage that earthquakes can cause to your home, belongings, and other buildings on your property. 

  • It provides coverage if your home is destroyed by an earthquake.
  • It’s a separate endorsement you must buy and add to your homeowner or renter policy.
  • You can also buy a stand-alone policy separate from your homeowner policy.
  • It’s usually sold with deductibles equaling 10 to 25 percent of the structure’s policy limit.
  • It only pays for damages that exceed the deductible.
  • There may be a separate deductible for contents, structure and unattached structures like garages, sheds, driveways, or retaining walls.
  • Generally, this coverage isn’t available to buy for a period after an earthquake.

 Before you buy earthquake insurance 

If you have a mortgage, you must have homeowners’ insurance, but you do not have to buy earthquake insurance. Your homeowner’s insurance does not cover earthquake damage (except fire). In addition to your homeowners’ insurance, you must purchase separate earthquake insurance if you so desire. 

I have homeowner’s insurance. How can I get earthquake insurance?

If you have homeowner’s insurance in California, your insurance company must offer to sell you earthquake insurance. Your homeowner’s insurance company must offer this every other year.  The offer must be in writing. It must tell you the amounts it covers (the limits), the deductible, and the premium. 

 Does earthquake insurance cover all damage from earthquakes?

 No. There are limits on what earthquake insurance pays. The purpose of earthquake insurance is to help put a roof back over your head. It does not replace everything you lost.

 What if I rent?

You can buy earthquake insurance to cover damage to your belongings and to pay for living somewhere else while your rented home is being repaired.

 What if I have a condo?

You can buy earthquake insurance to cover damage to your belongings. It can also pay for living somewhere else while your condo is being repaired. You may also need insurance to help pay for your condo association assessment to repair your building. Talk to your condo association.

 What if I have a mobile home?

You can buy earthquake insurance to cover damage to your home and belongings. It can also pay for living somewhere else while your mobile home is being repaired.

 The California Earthquake Authority

 The California Earthquake Authority (CEA) provides most earthquake insurance in California. CEA offers earthquake policies, for homeowners, mobilehome owners, condo unit owners, and renters. You cannot buy earthquake insurance directly from CEA you buy it directly from insurance companies that are members of CEA.

 You must have a residential property insurance policy in place in order to get a CEA earthquake policy. You must purchase your CEA policy from the same insurance company that you have your residential policy with-see the list of CEA-participating insurers here.

 Visit the CEA website at www2.earthquakeauthority.com for more information.

 For more information

  • Contact the California Earthquake Authority (www.earthquakeauthority.com) to learn more about earthquake insurance, estimate your premium, and print free earthquake preparedness handbooks. 
  • Contact Earthquake Country (www.earthquakecountry.org) to find information on retrofitting, learn how to prevent injuries and make a disaster plan, and learn about risks from fault lines and soil types. 
  • Contact the Seismic Safety Commission (www.seismic.ca.gov) to learn about earthquake safety in California. 
  • Contact the U.S. Geological Survey (https://earthquake.USGS.gov) to search for fault lines in your area.   

To learn more

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CMR & Associates provides independent retirement and insurance advice by reviewing your current plans to improve coverage and reduce cost. Through our proprietary database – The CMR Database®(comprised of some 13,000 brokers and specialists globally) – we maximize access to the retirement and insurance industry for greater options that will translate to better coverage and lower cost. Since 1999, we have saved clients over $120 million.

Please email CMR Associates or call 877-447-4301 or 212-447-4300 for more information.