Should I Buy Earthquake Insurance?

It can be expensive, but it’s the only way to protect your home if an earthquake strikes
Expert: Andrew Flueckiger Written by Andrew Flueckiger
Expert: Andrew Flueckiger
Written by Andrew Flueckiger

Andrew Flueckiger in an insurance writer for He's a licensed insurance agent who has earned his CIC designation and has written extensive insurance articles for many publications.

Earthquakes - Consumers need special insurance for

Earthquakes happen all across the country, though most of them are minor enough that you can’t even feel them. But everybody knows about the big earthquakes that are predicted to happen at some point in California and parts of the Midwest. 

Big earthquakes cause massive damage. The most expensive earthquake in US history was in 1994 in Northridge, California. At the time, the total amount that insurance paid out was around $15 billion, which in 2020 would be closer to $27 billion. And in today’s dollars, the infamous San Francisco Earthquake in 1906 would have cost insurers close to $105 billion. 

But even if it’s not a big earthquake, small ones can still cause significant damage to your house. 

Standard home insurance does not cover earthquakes, just as it doesn’t cover floods. These are considered to be too risky for insurance companies to cover, since they can cause catastrophic damage in one area all at once, potentially leaving the insurer with millions of dollars in claims all in one area. 

However, you can still buy earthquake coverage. Even though it’s not automatically covered under homeowners insurance, you can add earthquake coverage to your existing homeowners or renters insurance policy, just like you can add water backup coverage. Or you can buy earthquake insurance directly through a small number of private insurance carriers. In California, the California Earthquake Authority, a privately funded, publicly managed organization, provides homeowners with earthquake insurance.

What Does Earthquake Insurance Cover?

Earthquake insurance covers damage to your house, any other structures on your property like a shed or detached garage, and your personal belongings, such as your furniture, clothes, TV, etc., all from an earthquake event.

An earthquake is typically defined by insurance companies as a shaking of the earth that’s either caused by tectonic plate movements or volcanos. They usually consider “one” earthquake to have occurred in any 72-hour period, meaning you would have coverage for any aftershocks or tremors that are part of the same earthquake event. 

This definition of earthquake is important because it specifically mentions volcanos or tectonic movement. So things like sudden earth collapses are not covered under earthquake coverage. If there’s no proof of a tectonic movement, you wouldn’t have coverage. 

If the earthquake results in a fire or water damage, your home insurance policy will cover those. Remember that water damage is not automatically covered under your homeowners policy, and if the damage is caused by a surge in water, like a tsunami, then you’ll need flood insurance to cover that damage, even if it was caused by the earthquake. 

Does Homeowners Insurance Cover Earthquakes?

Homeowners insurance specifically excludes earthquakes, which means it does not cover earthquakes under the standard policy. To buy earthquake coverage, you’ll need to add it to your policy as an endorsement, or add-on. 

Adding earthquake insurance as an endorsement will give you the same type of coverage that you have on your home for any other loss, such as fire or wind. For example, if you have $300,000 of coverage on your home with replacement cost, now you’ll also have up to $300,000 with replacement cost for damage caused by an earthquake. 

One key difference with earthquake insurance is the deductible. Most earthquake policies or add-ons will require you to choose a separate deductible, different from the one that you have on your regular homeowners insurance. 

Your earthquake deductible is normally going to be set at a percentage of whatever coverage you have on your house. Deductible options vary among insurers, but are usually between 5% and 25%. So if you choose a 10% deductible on your $300,000 home insurance policy, you would have a $30,000 deductible. 

While this may seem unfair on the face of it, it prevents smaller claims from happening. Earthquake insurance is mainly designed to cover catastrophic losses, where if you have a total loss, you’ll have coverage. 

Does Renters Insurance Cover Earthquakes?

Renters insurance does not automatically cover earthquake losses, but you can probably add an earthquake insurance endorsement to your current renters insurance policy. Earthquake insurance on renters insurance is designed the same way as it is on home insurance. 

You’ll receive the same amount of coverage on your contents that you have listed on your policy, but now you’ll have coverage for earthquakes as well. But you’ll still be faced with the higher deductible choices of 5% to 25%. 

So if you have $30,000 in personal contents coverage on your renters insurance policy with a 10% deductible, you’ll have a $3,000 deductible. 

How Much Is Earthquake Insurance?

The cost of earthquake insurance is largely based on your location: if you live in an earthquake-prone area, like most parts of California, then your premiums will be much higher than for somebody adding earthquake coverage in a low-risk area. 

Location is the most important rating factor of earthquake insurance, but also the condition of your house or building also plays an important role. An older building that’s at risk of being blown away in the wind will face much higher rates than a newly constructed, sturdy building that could resist parts of an earthquake’s power. 

For homes in a high-risk area like California, you can reasonably expect to pay between $500 and $1,000 per $100,000 in coverage. For a half million dollar home, this might mean your earthquake premium will be between $2,500 and $5,000 a year. This premium is in addition to any other insurance premium you have. 

For homes in a low risk area, like many parts of the Midwest, you may only pay between $50 and $200 a year for earthquake coverage. The rates are much lower but will largely depend on how much coverage you have on your home.

Is Earthquake Insurance Worth It?

If you live in a high-risk area, earthquake insurance is expensive but is likely worth it if you can afford it. Unfortunately, strong earthquakes have a good chance of causing you to have a total loss on your home, making it very risky to go without earthquake insurance. 

Even if you live in a low-risk area, the low premiums for earthquake insurance can make it a worthwhile addition. 

Besides the high premiums, the only negative about earthquake insurance is it’s high deductible. Having a $30,000 deductible or higher can seem like a bad deal, and while it’s not ideal, it’s important to remember that earthquakes are likely to result in a total loss on your home, meaning you would receive the full amount on your policy if you decide to rebuild. 

If you only have a partial loss, then you might not be able to use your coverage since you have such a high deductible. And unless you have a high limit renters insurance policy, as in around $100,000 or so of contents coverage, it probably doesn’t make sense to have earthquake insurance on your renters insurance policy. 

Whether or not earthquake insurance is a good deal on your homeowners insurance will come down to the level of risk that you’re comfortable with and whether or not you can afford the extra premium. 


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The Benefits of an Independent Insurance Agent

A local independent insurance agent can be your advisor for all things insurance, including whether or not it makes sense for you to buy earthquake insurance. There are pros and cons to every situation, so your independent insurance agent can walk you through it and find the best solution for you. 

For example, if it costs $1,000 to buy earthquake insurance but you can save $500 a year on your other insurance by going through an independent insurance agent, then the deal makes much more sense. Talk with a local independent insurance agent today and find out whether earthquake insurance makes sense for you. 

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