What Constitutes Comprehensive Earthquake Insurance Coverage?

When you’re shopping for something as important as earthquake insurance, it’s natural that you’ll want to get the biggest bang for your buck! In California, insurance providers are required by law to offer earthquake coverage. When you receive this offer, you don’t need to accept it immediately (or at all). You always have the right to search for the best, most comprehensive coverage available.

When it comes to earthquake insurance, there are misconceptions that can lead homeowners to believe that policies are costly and restrictive. While this may be true for some people, it’s also true that many homeowners are exposing themselves to significant risk due to the complexities of the insurance market. Despite the confusion surrounding earthquake insurance, it’s important to know that comprehensive coverage is available, and it’s essential to protect your property and assets from damage caused by earthquakes. To fully understand your options and navigate the complex process of obtaining earthquake insurance, it’s recommended that you seek the guidance of experts, such as the California Earthquake Authority, to help you find the best coverage to meet your needs.

For over 15 years, I’ve worked as a public adjuster throughout California. Most of the time, I find myself helping homeowners with fire and water damage claims. Unfortunately, I’ve seen for myself the risks that come from forgoing earthquake insurance. In fact, sometimes floods and fires that result from earthquakes even lead to denied homeowners insurance claims. For that reason, I’ve created this article to help you thoroughly investigate your earthquake insurance options.

How much coverage do I need?

When getting earthquake insurance, it’s important to think about what you need covered. In addition to your home, you must consider your belongings. Earthquake insurance policies automatically include contents coverage and allow you to select the coverage limit. In many cases, you’ll also have the option to purchase all your coverages together under one deductible or choose to have separate deductibles for your dwelling and personal property coverage.

Do I need to add the optional coverage?

In addition to the basic coverage components, there are additional coverage options your provider might offer. Most commonly, you’ll see offers for loss of use, building code upgrades, emergency repairs, breakables, and exterior masonry. As you consider your policy options, ask yourself:

• How old is my home? Is it currently compliant with building codes? Could I manage the expenses of code-compliant rebuilding or repairs?
• Do I have funds available for emergency repairs if they are needed to prevent additional damage after an earthquake?
• How many of my belongings are considered highly breakable and are those belongings of significant value? Could I afford to replace them without financial assistance if they were destroyed?
• Is there masonry (a facing of brick, concrete, stone, tile, or similar material) on the exterior of my home? How important would it be to replace that masonry if I needed to rebuild?

How is my rate going to be determined?

For most homeowners, trying to understand the risk-based pricing model that insurers use to determine coverage costs is like trying to read a foreign language. In the simplest terms, providers look at factors like your location, the age of your home, the building materials used in construction, and even your soil type. They also look at whether your home is sitting on a raised foundation versus a slab foundation.

Journalists from the Bay Area division of NBC recently contacted Sarah Sol, a spokesperson for the California Earthquake Authority, for more information on premium pricing. Sol explained: “As a not-for-profit, our rates are based on the best available scientific information about earthquake risk. They take into account the most recent Uniform California Earthquake Rupture Forecast (UCERF3), which recognized the increased risk of larger earthquakes in California and the potential for multi-fault ruptures.”

Deductibles are the final piece of the premium puzzle. Insurance providers look at the deductible you’ve requested, along with all of the factors mentioned above, in order to calculate your annual premium

Final Thoughts

Experts have determined that California is likely to experience another massive earthquake in the next few decades. While purchasing earthquake coverage can be expensive, in most cases, that cost pales in comparison to the price of repairs after a disaster.

Currently, more than 90% of California homeowners are living without earthquake insurance. The state Insurance Commissioner – Ricardo Lara – urged the public to reconsider that decision, saying: “Living in California means living with the risk that an earthquake may strike at any moment. If you have not shopped for earthquake insurance in the last five years, give it another look.”

If you’re feeling uncertain about certain coverage limits, we recommend speaking to your insurance agent. Ask them to talk through the factors used to determine your rate, tell you what is and isn’t covered, and suggest additional coverage types you might need.

Have more questions about earthquake insurance coverage? Don’t hesitate to reach out to us. As public adjusters, we’re not involved in the sale of insurance policies and we don’t receive compensation if you purchase a policy. Our role is to help homeowners that are dealing with insurance claims. We’ve seen the aftermath of earthquake damage firsthand, and we’d like to help you make sure that you’re protected before the unexpected occurs.