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What is Earthquake Insurance?

Earthquake Insurance is form of property insurance that pays the policyholder for damages caused by an earthquake. Most ordinary homeowner’s insurance policies do not cover earthquake loss.

Since most homeowners insurance do not cover earthquakes, most earthquake insurance policies feature a high deductible. In the event that the earthquake destroys the home, it makes this type of insurance useful, but not so if the home is just damaged. Rates depend on location and the probability of an earthquake and whether or not you’re sitting on or near a fault line. Rates may also be cheaper if the home is made of wood, which withstand earthquakes better than homes made of brick.

Insurance companies must be careful when assigning this type of insurance, because an earthquake strong enough to destroy one home will probably destroy dozens of homes in the same area. If one company has written insurance policies on a large number of homes in a particular city, then a devastating earthquake will quickly drain all the company’s resources.

Please Note: Some states include earthquake insurance in a typical homeowner’s policy but then it is added as an exclusion. If you do not have earthquakes as an exclusion, you might want to contact your home owners insurance company to see if you are already covered.