Is Earthquake Insurance Worth It?
- Earthquake insurance is expensive and usually includes high deductibles — but if you get a good deal, it could be worthwhile.
- Average earthquake insurance costs range from less than $300 a year on the East Coast to more than $1,300 a year in California.
- Regular homeowners insurance doesn’t cover earthquake damage — you’d need to get it as an add-on or a standalone policy.
When is earthquake insurance worth it?
Earthquake insurance is usually worth it in earthquake-prone areas, so long as you can get it at an affordable rate. It can protect you from the potentially huge cost of having to repair or rebuild your home after a major quake.
However, earthquake insurance can get expensive and has high deductibles. As such, you’d have to spend a lot of your own money before the earthquake insurance kicks in.
Earthquake insurance pros and cons
| Pros | Cons |
|---|---|
| Pays to repair or rebuild your home after an earthquake Usually also covers your belongings and temporary living expenses Protects you from having to take out a large loan to cover repairs | Policies can be expensive in some areas High deductibles mean large out-of-pocket costs You may even still need a small loan to cover your deductibles |
Most homeowners insurance companies will give you an earthquake insurance quote. Some companies offer earthquake coverage as an add-on to an existing homeowners policy. Others offer standalone earthquake insurance.
How much does earthquake insurance cost?
The cost of earthquake insurance depends on factors like where you live and your home’s features.
| Area | Typical price range |
|---|---|
| California | More than $1,300 a year |
| Texas | $500 to $800 a year |
| East Coast | Less than $300 a year |
The key factors that determine your earthquake insurance rate include:
- Your home’s proximity to fault lines: The farther away you are from faults, the less you pay.
- Your home’s age: Newer homes can qualify for lower earthquake insurance rates because they meet stronger seismic standards.
- Your home’s construction style: Wood-framed homes often get lower rates because they withstand earthquakes better than others. Some companies don’t insure brick homes or other masonry.
- The amount of coverage you need: Earthquake insurance usually covers your home at its replacement value (also known as its rebuild cost). The higher the value, the more you pay.
Is an earthquake retrofit worth it?
Some earthquake insurers offer a discount for retrofitting an older home for earthquake safety. The steps include bracing “cripple walls” (the small walls on the foundation supporting the flooring) and bolting the home to its foundation.
The average cost of retrofitting a home ranges from about $3,500 to $8,700, according to contractor marketplace Angi.
An earthquake retrofit makes your house safer, so it’s a good investment whether you buy earthquake insurance or not.
What happens if your house is destroyed in an earthquake?
Having earthquake insurance can protect you from a massive financial hit if your house is destroyed in an earthquake.
If you don’t have earthquake insurance, the options for rebuilding your home include:
- Getting a disaster relief loan and/or second mortgage, which require repayment
- Selling your home for a reduced price, due to unrepaired damage
Both of these options can reduce the equity you’ve built in your home.
Even if you have earthquake insurance, you may still have to borrow some money to cover your deductibles. However, earthquake insurance can cover the largest expenses without requiring you to pay off a large loan.
What does earthquake insurance cover?
Earthquake insurance covers damage to your home and belongings, plus certain other expenses.
Dwelling
Your earthquake dwelling coverage pays to repair or rebuild your home. The dwelling limit in your earthquake policy usually needs to match or exceed the one in your regular homeowners policy.
Other structures
Other structures include sheds, detached garages, retaining walls, staircases and pavement. Earthquakes can be particularly rough on these, and some companies don’t offer this coverage or only have it on a limited basis.
Personal property
Your personal property (also called “contents”) includes your appliances, furniture, electronics, clothing and other belongings. Creating an itemized list of your possessions and their value is a good way to figure out how much of this coverage you need.
Loss of use
Loss of use covers temporary living expenses if an earthquake leaves your home uninhabitable. Your loss of use limit should be high enough to cover at least a year’s rent. Be aware that a major earthquake may cause a surge in demand and costs for temporary housing.
Loss assessment
Some earthquake policies include loss assessment coverage. This covers assessments that your homeowners association (HOA) may charge to repair common areas in your community or complex. This coverage is usually cheap and worth getting if you have an HOA.
When an earthquake causes a fire
Although homeowners insurance doesn’t cover earthquakes, it does cover some damage that may accompany an earthquake. If an earthquake causes a fire to break out, your home insurance will usually cover the fire damage.
How do earthquake insurance deductibles work?
Earthquake insurance deductibles usually range from 2% to 25% of your coverage limits. This can make them considerably higher than your home insurance deductible.
A deductible is the amount you pay before insurance funds kick in. For example, if you insure your $400,000 home with a 15% earthquake insurance deductible, you’re responsible for the first $60,000 in repairs.
In this scenario:
- An earthquake that causes $70,000 worth of damage only allows you to get $10,000 from your earthquake insurer.
- If your house is completely destroyed, you can only get up to $340,000 from the insurance company.
Some companies apply a single deductible to your entire claim. Others apply separate deductibles to each coverage. Separate deductibles can sometimes make it easier to get a partial insurance payment.
For example, if your home repairs cost less than your dwelling deductible, you won’t get any insurance money. But if the costs of fixing your retaining wall exceed your “other structures” deductible, then you’ll at least get some insurance money for these repairs.
Earthquake insurance for condo owners or renters
Separate forms of earthquake insurance are available in most states for condo unit owners and renters.
- Condo owners usually need less dwelling coverage than other homeowners and typically get cheaper earthquake insurance.
- Renters typically don’t need any dwelling coverage and usually get the lowest earthquake insurance rates.
- Earthquake insurance for condo owners and renters usually includes contents coverage and loss of use. Both can prove invaluable after an earthquake.
- For renters, loss of use covers the portion of your temporary housing costs that exceed your normal rent. It’s often called “additional living expense” (ALE) coverage.
- If your condo has an HOA, make sure your earthquake policy includes loss assessment coverage.
Methodology
California earthquake insurance rates are based on actual policy costs reported by the state’s Department of Insurance in 2023.
Texas rates are based on estimates from the Texas Department of Insurance.
Earthquake insurance rates for the East Coast are based on estimates from the Insurance Information Institute.
Your rates may vary.
Frequently asked questions
Earthquake insurance isn’t required by law in any state. In California, insurance companies are required to offer earthquake insurance, but customers don’t have to buy it.
High risk earthquake zones are found along the entire West Coast and in Nevada and other Western states.
East of the Rocky Mountains, the New Madrid Seismic Zone has the highest earthquake risks — it stretches from northeastern Arkansas to southern Illinois and includes portions of Missouri, Tennessee and Kentucky.
Possibly. According to the U.S. Geological Survey, 42 states are at risk of experiencing a damaging earthquake. Of the eight states without significant earthquake risks, only Florida is on the East Coast. In other words, earthquake risks are present in most East Coast states.