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Earthquake Insurance

Many homeowners assume their basic homeowner’s policy covers earthquakes. Unfortunately, this can lead to an unpleasant surprise in the event of earthquake damage. Earthquake insurance is a specialty form of property insurance that covers you if your home is damaged or destroyed by an earthquake. It may come in the form of a special endorsement added to your existing homeowner’s insurance policy or it may be purchased as a stand-alone policy. Here is what you need to know about earthquake coverage.

How it Works

Earthquake coverage usually has a deductible of 10-25% of the home’s policy limit. The deductible refers to the amount you need to pay before the insurance kicks in. If you need to make a claim, your policy will pay for any covered damages that cover the deductible. There are generally a few exclusions to the types of damage that are covered by the policy. Most policies will not cover the loss of separate garages, fences, landscaping, or pools.

Quake coverage is not as customizable as some forms of insurance. For example, coverage cannot be extended to other structures like a free-standing garage. Coverage limits tend to be low for personal property and additional living expenses (or loss of use to pay for a place to stay if you’re forced from your home), although you can usually raise the coverage on these options at an additional cost.

Do You Need Earthquake Insurance?

Earthquakes can happen almost anywhere. The U.S. Geological Survey estimates that earthquakes pose a serious risk to about 75 million people in 39 states. Consider the type of damage your home may suffer if an earthquake strikes: unreinforced masonry like brick walls and chimneys are likely to be damaged and you risk suffering a catastrophic loss that may cause your home to collapse or shift off its foundation.

While earthquakes are unpredictable and rare, it’s important to consider this type of coverage if you live in a quake-prone area.