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 in damage.
Earthquakes cannot be prevented and can strike unexpectedly. Even the most structurally sound homes can suffer extensive damage from earthquakes. 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 coverage could help pay to rebuild it. During the repair or rebuild process, your earthquake insurance policy could also cover the cost of necessary temporary living arrangements, called loss of use coverage or additional living expenses.
California homeowners need a separate policy for earthquake coverage because traditional homeowners insurance excludes earthquake damage. Without earthquake coverage, 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 coverage providers. CEA is a not-for-profit organization and its premiums are reflective of 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 many home insurance providers. 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 may be 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 coverage in California, Oregon and Washington. GeoVera offers single limit coverage, which means there is one combined limit for all coverages available.
GeoVera offers three tiers of earthquake coverage. The coverage options are nearly identical, but the “split limit” policy has the highest coverage limits with up to $1.9 million in dwelling coverage. Here is what coverage is included with a GeoVera earthquake insurance policy:
- Other structures
- Personal property
- Personal liability
- Additional living expenses
- Building code upgrade
There may be additional coverage options available for GeoVera’s earthquake insurance policies. You could speak with a company agent to make sure you choose all the ones best suited for your home and circumstance. 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 dependent 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
- Deductible amount
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 coverage costs mostly depend on the home itself. Generally speaking, the more risk your home faces, the higher your premium will be.
California homeowners should be prepared for an earthquake in case one should strike at any time. Because earthquakes cannot be predicted, knowing how to get your home and your family ready in the event of an earthquake is extremely important. Not only can it help save your life, but it can help minimize damage.
First, make sure that any heavy items in your home are secured. This includes furniture, appliances, electronics, hanging objects and even ceiling fans. Keep tall and heavy objects away from areas where you normally spend time, like your living room couch or dining room table. Trim the trees in your yard regularly, so no heavy branches overhang the roof.
Also ensure that fragile or valuable items are not at risk of sliding off shelves. If you have cabinets, consider installing latches to keep the contents from falling out during an earthquake. This is especially important if you keep chemicals or flammable items in your home.
It is also a good idea to make a plan with your family in case of an earthquake. Designate a meeting spot and keep a disaster kit handy that includes a radio or other device where you can receive updates, non-perishable food and water, a flashlight, extra batteries and a first aid kit.
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 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 coverage?
Earthquake insurance can be expensive, depending on your home and location. However, there are ways to save money. CEA offers discounts for homes built before 1980 that have wood-frame construction, have a raised foundation 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. Keep in mind that raising your deductible will cause a more expensive out-of-pocket cost in the event of a claim.