California has more damage-causing earthquakes than any other state. The costliest earthquake in California history was the Northridge earthquake in 1994, which resulted in roughly $20 billion dollars in damage. Over the last 100 years, eight out of the 10 most expensive earthquakes occurred in the Golden State.
Earthquakes cannot be prevented and strike unexpectedly. Even the most structurally sound homes can suffer extensive damage following an earthquake. That is why California homeowners should consider purchasing earthquake insurance to protect their property.
Why California homeowners need earthquake insurance
Earthquake insurance covers home and property damage caused by an earthquake. At a high level, it covers damage to the exterior of your home and your personal belongings. Some earthquake insurance policies also extend coverage to other structures, like a pool, shed or fence.
If your home gets destroyed by an earthquake, California earthquake insurance will help pay to rebuild it. During the repair or rebuild process, your earthquake insurance policy will also cover the cost of temporary living arrangements, called loss of use coverage.
California homeowners need earthquake insurance because traditional homeowners insurance excludes earthquake damage. Without earthquake insurance, you would be financially responsible for paying to repair or rebuild your home out-of-pocket.
California residents are often told to prepare for “the big one.” At any moment, a catastrophic earthquake could strike and effectively flatten some cities and towns. In 2015 alone, there were 130 recorded earthquakes in California with a magnitude of three or higher. When it comes to earthquake protection, being proactive is essential.
Where to purchase earthquake insurance in California
Earthquake insurance is typically sold as a standalone insurance policy. However, you may be able to add an endorsement to your homeowners insurance policy. The type of earthquake insurance available depends on the risk where you live and coverage needed.
The California Earthquake Authority
The California Earthquake Authority (CEA) is one of the biggest residential earthquake insurance providers. CEA is a not-for-profit organization, and its premiums are reflected by the latest science around earthquake risks in California. CEA offers the following coverages:
- Personal property
- Loss of use
- Building code upgrades
- Emergency repairs
- Exterior masonry veneer protection
CEA earthquake insurance is available through your home insurance provider. There are currently 25 property insurance companies that sell CEA coverage. Keep in mind that CEA does not sell standalone policies. In order to qualify for CEA insurance, you must have a homeowners insurance policy with one of the participating insurance companies.
A perk of CEA insurance is that homeowners have flexibility in what coverage options and deductibles they want to choose. For instance, you can pick different coverage deductibles for your dwelling and personal property coverage, depending on your specific needs. Dwelling coverage is available with a deductible of 5%-25%.
If you own an older home retrofitted to withstand earthquake damage, you could qualify for a discount on your CEA insurance. California homeowners are eligible for a lower premium if their home meets the following criteria:
- Was built before 1980
- Is constructed with wood frames
- Is built on a raised foundation or other non-slab foundation
- Is seismically retrofitted based on California standards
Other ways to buy earthquake insurance
The other option for buying earthquake insurance in California is to purchase a standalone policy through a private insurance company. If you choose this option, consider looking into GeoVera. It sells standalone earthquake insurance in California, Oregon and Washington. GeoVera offers single limit coverage, which means there is one combined limit for all coverages available.
GeoVera offers two tiers of earthquake insurance — Standard and Comprehensive. The coverages are nearly identical, but the Comprehensive policy has higher coverage limits and includes other structures coverage. Here is what coverage is included with a GeoVera earthquake insurance policy:
- Other structures (Comprehensive)
- Personal property
- Loss of use
- Engineering and demolition costs
- Building code upgrade
- Loss assessment
- Debris removal
GeoVera’s policies offer different deductible amounts by state or certain areas. If a 15% deductible is available, then with a coverage limit of $400,000 and a 15% deductible, for example, the out-of-pocket deductible cost would be $60,000.
Cost of earthquake insurance in California
The price of earthquake insurance is different for every homeowner. When calculating earthquake insurance costs, there are a few factors to consider. Your earthquake insurance premium is largely depending on the following factors:
- The age of your home
- The materials your home is built with
- The type of foundation
- The home’s proximity to a fault line
- Reconstruction costs
- Coverage type
To get a sense of what you will pay for coverage, use the CEA’s earthquake insurance premium calculator. Unlike traditional home insurance, earthquake insurance rates are generally not related to the homeowner. Earthquake insurance costs mostly depend on the home itself. Generally speaking, the more risk your home faces, the higher your premium will be.
Frequently asked questions
What is the best earthquake insurance company?
The best earthquake insurance company in California is going to be different for every homeowner. However, CEA insures the most homes in California. Some insurance companies offer private earthquake insurance, like GeoVera, but the policies may be more expensive.
How much earthquake insurance do I need?
The amount of earthquake insurance coverage you need is specific to every homeowner. Certain factors like the age of your home, the materials it is built with, the proximity to a fault line and the type of foundation should all be considered when choosing your coverage limits. Talk to an insurance agent for additional guidance on what coverage to choose.
How can I save money on earthquake insurance?
Earthquake insurance can be expensive, depending on your home and location. However, there are ways to save money. Discounts are available for homes built after 1980, meet certain building criteria and are seismically retrofitted based on California standards. If you are comfortable with lesser coverage, you may get a lower premium by raising your deductible and lowering your coverage limits.