How Much Does Earthquake Insurance Cost?

Earthquake insurance is a form of insurance that covers property owners for damage caused by earthquakes. Most regular property insurance policies do not cover earthquake damage. In parts of the world that are prone to earthquakes, insurance companies are often required by law to provide earthquake insurance. Earthquake property damage coverage tends to include a high deductible, making it useful only in situations where the home is a total loss.

The cost of earthquake insurance varies according to numerous factors. The most obvious of these factors is the location of the property and the probability of earthquake damage. The type of building construction is also a relevant factor to determine earthquake insurance cost. Homes made of wood, for example, are more flexible and are better able to survive a tremor than a home made out of brick or concrete. Insurance coverage for earthquake damage is also available to renters, as they could possibly lose all of their possessions in such a disaster.

Earthquake Insurance Rates

As with all forms of insurance, earthquake insurance rates vary regionally as they are governed by state law, not federal law. Efforts as recently as 2006 to pass a National Insurance Act have failed. Earthquake insurance premiums are generally in multiples of $1000 in replacement value. In the Pacific Northwest, for example, a brick home is usually insured at a rate of $3 to $5 per $1000 of replacement value. On the East Coast, however, rates are considerably less, running at a rate of about 75 cents per $1000 in replacement value.

Stand-Alone Earthquake Insurance

Stand-alone policies are a substantial part of any discussion relating the cost of earthquake insurance, as they are often a less expensive alternative for some homeowners. In some states, not all insurance companies are required to offer earthquake insurance. So, this coverage must often be purchased as a separate policy. The decision to purchase stand-alone insurance is based on whether the separate policy is less costly than adding coverage to the home owner’s existing policy. In many cases, this answer is yes.

Earthquake Insurance Coverage

Because a regular home insurance policy will not cover earthquake damage, earthquake insurance is vital. Many people would believe that only states like California, Alaska, and Nevada would need such coverage, but the tremors in Virginia in late 2011 have shown that everyone who owns a home should have this coverage. The policy should cover any needed repairs to the home, and ensuring that repairs are completed according to the current building regulations. Personal property losses should be covered, as well as living expenses since the repairs are done to the home. Deductibles can range anywhere from a low of 2% to a high of 20%, with rates in the range of 10% being common in earthquake prone areas of the United States.

Should I Get Earthquake Insurance?

The answer to this question is a resounding “Yes!”  No place is completely safe from damage due to earth movement. In 2011, property along the east coast around Virginia was damaged by an earthquake. Earthquake insurance cost for homes in regions that are not at great risk for damage is extremely affordable. Homeowners are not the only ones who need coverage. Renters as well should seriously consider purchasing this insurance, as they will not be covered under the landlord’s existing policy. Renters as a general rule tend to neglect to buy insurance, yet they are can least afford to lose all that they have in a natural disaster.

When purchasing coverage, be sure to purchase enough. You will need enough money to rebuild or repair your home. You will also need to replace your belongings that might be lost or destroyed. It might be smart here to determine what you need to replace the most to cut down on earthquake insurance cost. You also will need to have coverage for living expenses, although everyday expenses like groceries and car payments are not going to be covered.