Standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available either in the form of an endorsement or as a separate policy.
Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard home and business insurance policies. Unlike flood insurance, earthquake coverage is available from private insurance companies rather than from the government.
In California, homeowners can also get coverage from the California Earthquake Authority (CEA), a privately funded, publicly managed organization.
Is earthquake insurance worth getting?
If you live in an area prone to earthquakes, you should at least consider the pros and cons of earthquake insurance. Start by asking yourself if you could afford to rebuild your home and replace your personal belongings without insurance.
Keep in mind that the federal government’s disaster assistance is limited. Grants for home repairs are meant to cover essential repairs only, to get your house to be safe and clean, not to restore it back to its original condition. Additional financial help is often in the form of loans that have to be paid back.
Many people find earthquake insurance to be pricey, especially considering the high deductibles that they’d have to cover anyway. If your quake damage amount is less than your deductible, insurance won’t pay out. But only you can do the math on whether earthquake insurance is a smart buy in relation to the potential payout.
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