Earthquake damage ranges from minor items to complete destruction of the home.
California is more prone to earthquakes than any other state in the country. Because of this, having earthquake insurance in California offers you a degree of financial protection that could mean the difference between financial ruin and a temporary setback. You may never need to file an earthquake-related insurance claim, but having unused coverage is less expensive than paying for full repairs out of your own pocket.
Earthquake Statistics
According to the U.S. Geological Survey, the odds of California being hit by a major earthquake in the next 30 years is approximately 62 percent, with the Bay Area the most likely location for a major quake of magnitude 6.7 or higher on the Richter scale. Statistically, this means that two out of three homes purchased today may be located in an area affected by a major earthquake before the mortgage of the home is paid off.
What Is Earthquake Insurance?
Earthquake insurance is intended to pay the costs to repair or replace a damaged home and other structures on the insured property. Earthquake damage can include a range of possible problems, including fire, structural damage, flooding and water damage. Even though the home may be covered for these problems without earthquake insurance, your insurance is not obligated to pay for such damages if they are caused by an earthquake and you do not have earthquake insurance.
High Risk Coverages
Because California is a high risk state for earthquakes, not all insurance companies offer earthquake coverage. Instead, you may have to purchase the coverage through specialty insurance companies, such as the California Earthquake Authority or through state-sponsored insurance pools that all insurance companies are required to participate in.
Earthquake Insurance Exclusions
Earthquake insurance will cover flood damage related to an earthquake but will not pay for flooding related to other causes, such as hurricanes or spring runoff. Similarly, your home may be covered against fire damage but would not be protected against the same damages if they were caused by an earthquake unless you had purchased earthquake coverage.
Home and Other Structures
Pay close attention to how your earthquake insurance is worded. For example, some types of earthquake insurance will cover the home but will not extend coverage to other buildings on the property, such as a garage or guest bungalow. If your policy excludes these buildings, you can increase the coverage by purchasing an additional rider on your policy.
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