Only 17% of California’s homeowners have earthquake insurance. Are the rest in denial–or making a rational choice? Here’s the key advice and information you need to assess your need and shop wisely for earthquake insurance:
1. Size up your risk. Use a USGS map to check how prone your region is to earthquakes. If you’re in a higher risk area, what sort of ground is your house built on? Bedrock is more stable than sandy soil or fill. The quality and type of structure also plays a part in your risk. Brick, for example, is more likely to shake apart than a more flexible wood frame structure.
2. Assess the cost. The higher your risk, the more expensive the insurance. Earthquake insurance on a wood frame home built in Napa after 1990 with an insured dwelling value of $400,000 would cost $1,191 in premiums per year, while the same home built of brick or other material would cost $3,232 per year, according to the California Earthquake Authority, a publicly managed and privately funded provider of earthquake insurance. In both cases, the deductible is a steep 10 percent or $40,000, which is the amount eligible claimants must pay out-of-pocket.
3. Shop around. You can usually buy earthquake insurance from your current carrier as an add-on to your existing policy. Get a quote, but also shop at competing insurers to find the best price.
4. Consider mitigation. You can take steps to strengthen your house against earthquake by, for example, bolting the frame of the building to its foundation. The State of California offers mitigation assistance. By reducing the likelihood of structural damage, mitigation can reduce your premium.
5. Read the fine print. Most policies cover damage to the contents of the home, but typically not if the dwelling itself isn’t damaged or if you haven’t yet met your deductible. To protect yourself, never assume you don’t have sufficient damage to exceed your deductible; serious structural damage can be hidden behind walls, in the attic, and in crawl spaces and the foundation.