Earthquake insurance: Sturdier home coverage

An earthquake can shake up your life and devastate your home, but don't let it jolt your finances out of place. You need the right coverage, because your home insurance policy won't be enough.

About 81 percent of the world's biggest earthquakes occur along the Pacific earthquake belt nicknamed the "Ring of Fire," part of which runs up the West Coast from Southern California to Alaska, according to the U.S. Geological Survey. But quakes do happen in other parts of the U.S., such as the earthquake centered in Virginia that damaged the Washington Monument in 2011, and another that same year in Oklahoma, which was the state's largest earthquake in modern times.

Washington Monument © Steve Heap/

The Washington Monument is encased in scaffolding during repairs of damage caused by a 2011 earthquake.

Most U.S. households don't carry insurance to cover earthquake damage. Industry groups say half the losses from the Virginia quake were uninsured, while less than 1 percent of Oklahomans had the proper insurance for a quake.

Even in California, which has the highest earthquake risk in the country, only 12 percent of homes carry earthquake insurance, according to the Insurance Information Institute.

"That's its own disaster waiting to happen," says Glenn Pomeroy, CEO of the California Earthquake Authority, a nonprofit, privately funded insurer set up by the state government.

Here are five things to know about earthquake insurance.

Compare insurance rates in your area.

Get covered!

Conventional homeowners policies don't cover direct damage from earth movement, which includes earthquakes, landslides and sinkholes, says Chris Hackett, director of personal lines policy at the Property Casualty Insurers Association of America. Homeowners wanting earthquake coverage must see if their current insurer offers a rider on their homeowners policy or search for a separate policy altogether.

Earthquake coverage is offered by major insurers including State Farm, Travelers and Liberty Mutual. The Insurance Information Institute reports that the largest writer of earthquake insurance is the California Earthquake Authority, or CEA, created after insurers fled the state following the 1994 earthquake in Northridge that caused more than $15 billion in losses.

Northridge earthquake damage © spirit of america/

Northridge earthquake damage

Earthquake insurance premiums could exceed the cost of your homeowners policy in high-risk regions, the CEA's Pomeroy says. Annual coverage rates in California average about $1.75 per $1,000 of coverage, while premiums in lower-risk states can cost as little as 50 cents per $1,000.

Don't settle for a high premium

If the price for earthquake insurance is daunting, there are ways to reduce costs. For example, the CEA offers a 5 percent discount to California residents who retrofit their existing homes to make them less prone to shake damage, Pomeroy says. Such improvements include bolting or bracing the structure to the foundation. Homes built after 1979, when stricter building codes were enacted across the state, generally draw lower premiums.

Insurers may offer lower premiums on wood-frame homes versus ones made of brick or masonry, says Hackett. Frame homes typically can withstand shaking better, whereas brick or masonry homes aren't able to flex with the movement and can crack.


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