Earthquake Insurance FAQ

Q: Does my homeowners policy cover earthquakes?

A: Most standard homeowners, mobile homeowners, condominium, and renters insurance policies do not cover earthquake damage. Similar to flood insurance, earthquake insurance usually must be purchased separately.

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Q: Do I need earthquake insurance?

A: If an earthquake hit right now, would you have the financial resources to pay for the damage to your home and its contents? Many people assume their residential insurance policy fully protects them, but if you look at a typical policy, you will see it does not cover earthquake loss.

For most people, their home is their largest asset; when you consider earthquake coverage ask yourself how much of this investment you are willing to put at risk. Keep in mind Government disaster-relief programs are extremely limited and will not cover the cost to replace your home and everything lost in an earthquake. In addition, typical home loans and deeds of trust will hold you responsible for your loan balance even if your home is damaged or destroyed by an earthquake.

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Q: How much earthquake insurance should I have?

A: Like the basic question of whether earthquake insurance is right for, how much coverage is right for you depends on your individual circumstances. The following questions may help you decide:

• Can you afford to replace your household possessions (such as sofas, beds, TVs, furniture, refrigerators, and clothing) if they were destroyed in an earthquake? How much would they cost?
• If you have to find temporary accommodations because you cannot live in your home as the result of an earthquake, how much will you need to pay for those additional living expenses?
• If you own your home, how much home equity do you have? Can you afford to risk losing that equity if an earthquake damages or destroys the home?
• How much would it cost to rebuild your home? Do you have assets available to repair or even rebuild your home after an earthquake?
• Do you have a mortgage, second mortgage, or line of credit on your home? Can you afford to continue repaying those loans while also paying to rebuild or replace your home?

Keep in mind that the insured value of your dwelling for your earthquake policy is the same as the amount of coverage specified in your homeowners insurance policy. If you are underinsured on your homeowners policy, you are underinsured on your earthquake policy, too.

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