Some people who live in earthquake-prone areas just push away the thought of the next big one destroying their home. While it does little good to live anxiously expecting the worst to happen, it is a wise idea to look at the financial matters that will arise if that day does ever come. Many people leave their fate to the government, hoping that there will be some relief and that they will not be abandoned if their lives are destroyed by an earthquake. The fact of the matter is that the few government-subsidized disaster programs, like FEMA, are structured to give more than emergency assistance. What that means is that they will help meet the most basic needs to live, like food, water, and shelter. Not everyone qualifies for those programs either. Even if you qualify, this sort of help isn’t a permanent fix at all. Expensive loans are how most uninsured people end up financing their loss. Buying Earthquake Insurance is the best way to protect yourself, and if you’re not insured properly before the earthquake you won’t be covered. You must have coverage before the event occurs in order for you to file a proper claim that will help you rebuild your home.
Most people who have a mortgage are already required to have Homeowners Insurance. Many of them assume that they are protected in the event of an earthquake, but they are not. You must always buy a separate Earthquake Insurance policy. If you’re unsure whether or not you’re covered, contact an Insurance Specialist at (888) 772-4247.
In California, if you only have Homeowners Insurance during an earthquake, you are covered for fire damage if the fire was caused by the earthquake. That’s all that will be covered. In many other states, you will not be covered for anything related to an earthquake without Earthquake Insurance.
In California, if you have a Homeowner’s Insurance policy, that company must offer you Earthquake Insurance and every other year after that if you decline. If your company has not offered you Earthquake Insurance in writing, call an Insurance Specialist (888) 772-4247. They will not only further assist you but may also be able to help you save with discounts and bundling your Homeowner’s Insurance and Auto Insurance. A few companies offer “private label” Earthquake Insurance but most coverage is through the state-run California Earthquake Authority (CEA).
California residents only have 30 days to reply to the written offer for Earthquake Insurance from an insurance company or else it will be considered a rejection of the policy. However, you can contact an Insurance Specialist at any time and request it. Be persistent until you’re covered, especially if you live in California.
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Will My Earthquake Insurance Cover All Damages from an Earthquake?
Unfortunately, we wish the answer to that was a resounding yes, but it is a no. There are limits on what Earthquake Insurance covers, just as there are limits on what your Auto Insurance covers when you’re involved in an accident. In fact, the main purpose of Earthquake Insurance is to rebuild your home, not to replace what else was lost.
Is Earthquake Insurance Only for Homeowners?
No, in fact, condo owners, mobile home owners and renters can and should benefit from this type of protection. Earthquake Insurance will cover (up to limits) damage to personal belongings and for living expenses while the mobile home, condo or apartment you rent/own is being repaired. Earthquake Insurance is a very important coverage for all people in earthquake-prone areas to invest in. It’s often a matter of saving thousands of dollars more than the premiums paid over years.
Are There Any Prerequisites to Buying Earthquake Insurance?
You need to have a residential property insurance policy (Homeowner’s Insurance, Renter’s Insurance) already in place in order to buy Earthquake Insurance for any type of dwelling.
What Does Basic Earthquake Insurance Cover?
Reputable insurance companies in California offer a three-part coverage plan:
Part 1 (or Coverage A) covers your dwelling up to limits, which are the same as the limits you have on your homeowners insurance. Deductibles range from 5% to 25%. Remember that not everything is covered: fences, landscaping and separate structures are some items that will not be covered. Renters do not need Part 1 or Coverage A for protection.
Part 2 (or Coverage C) covers belongings in the home, like furniture, electronics and appliances. The limits you can choose from range from $5,000 to $200,000. You can also buy a separate and optional Breakables Coverage for fragile items in the home, like china, crystals and mirrors. Renters could benefit from this.
Part 3 (or Coverage D) covers additional living expenses (ALE) and loss of use. Basically, this last part covers the costs of living elsewhere while your dwelling is being assessed and then repaired. It can cover rentals, hotel/motel stays, meals, temporary phone lines, as well as moving and storage costs. You only are covered for what’s agreed upon as a reasonable amount of time while your home is being repaired or rebuilt or the amount of time it takes to move to another permanent residence and there is usually a maximum dollar and/or coverage period limit. Sometimes, there is a deductible for this coverage. Again, renters would benefit from this coverage, too.
Can I Buy Additional Coverage on Top of the Basic Plan?
Yes, you can upgrade your coverage, up to $30,000 in California. Also, the CEA policies cover the first $1,500 of emergency repairs on damages without a deductible.
What if I Don’t Have Homeowners Insurance but Want Earthquake Insurance?
Some companies offer stand-alone policies without requirements of buying home insurance. In California, these are not CEA policies, so you’ll need to be careful that you’re buying a legitimate policy.
What’s a Homeowners Choice Policy?
In California, the CEA offers this type of policy. You can choose a separate coverage for dwelling and personal property with different deductibles. Both deductibles, however, will not be applied to the same claim. Basically, the CEA waives the personal property deductible if the damages exceed the deductible amount for the dwelling. For some homeowners, this makes for the perfect protection plan.
What Condo Owners Should Know
Common areas and the exterior structure of your condominium community may be covered by your Homeowners Insurance but if you don’t have Earthquake Insurance you may not be covered for damages to those areas and held liable. Your association may require all unit owners to share in the cost of repairs or to pay the association’s deductible based on an assessment of damage. In California, your Earthquake Insurance provides up to $100,000 for your share of that cost if you add it as a separate coverage onto your policy.
What Determines the Cost of My Earthquake Insurance Premiums?
The main factor to consider is how much it will cost to rebuild your home and the type of construction it requires. Your location will also factor into the equation and so will the coverages you select and the amount of deductible you will be responsible to shoulder. Note that older homes often qualify for discounts up to 20% if they have been retrofitted to specific requirements.
Is There Anything My Earthquake Insurance Won’t Cover?
- Earthquake insurance usually doesn’t cover what your Homeowners Insurance covers. Fire is covered by Homeowners Insurance even if it was caused by an earthquake.
- Damage to land or landscaping is usually not covered by Earthquake Insurance, not even a sinkhole.
- Vehicles are not protected by Earthquake Insurance so be sure your Auto Insurance has Comprehensive Insurance in the event of an earthquake.
- If an earthquake causes a flood, Earthquake Insurance will not cover damages. You must have a separate Flood Insurance policy for any kind of flood, regardless of the source.
What Is Earthquake Retrofitting?
Earthquake retrofitting means to increase the safety and durability of your home. When you do this, your insurance rates go down because there will be fewer repairs needed in the event of an earthquake.
Older homes are usually more expensive to insure unless they are retrofitted. Other homes that are more costly to insure without retrofitting are: homes made of brick/masonry, homes with more than one story, homes on sandy soil instead of clay or rock, and homes that are not up to standard to meet building codes and health and safety codes about foundations and water heaters.
If your home is not up to code, you may have a very difficult time getting insured and if you do your rates will be higher and you may have a higher deductible. However, you are always eligible for a discount on both the premium and deductible after retrofitting your home.
Standard Retrofitting Measures:
- Bolting the house to the foundation
- Bracing the chimney
- Bracing the water heater to a wall
- Putting in automatic gas shut-off valves
- Using plywood to strengthen cripple walls
If your dwelling is damaged after an earthquake or you suspect there is damage that is not visible to the eye, contact your insurance company right away.
Your insurance company should assign a claims adjuster to inspect your home and assess the damage to the property. The assessment should be done as soon as possible. Be there to tell the adjuster what you suspect is damaged. Have the adjuster also look at the basement and any raised foundations as well as crawlspaces and slabs.
If you find more damage to the property after the visit from the adjuster, call the insurance company again and ask that a claims adjuster come and look at the newly found problem.
Important Things to Remember When Filing a Claim:
- Make sure the damage you’ve noticed is explicitly written in your claim.
- Your insurance company can deny a claim that is not reported within one year after the loss.
- If your company refuses to open a claim, either call an Insurance Specialist at (888)772-4247 or contact the CDI right away: 1-800-927-4357.
- You will not be covered for an earthquake if you buy Earthquake Insurance after the damage is done.
- After an earthquake, insurance companies do not sell coverage for a certain period of time. When they do offer it again, premiums are sometimes higher.
You want to be in the right hands when dealing with potential perils that could destroy the home you’ve made your very own. It’s important to start thinking about Earthquake Insurance before there is an earthquake. You’ll want to also make sure you have a solid Homeowners Insurance policy on your home but remember that this type of coverage will not cover most damages covered by an Earthquake (only fires caused by the earthquake will be covered without Earthquake Insurance). Call now to have a trusted Specialist help you make some important decisions about your home: (888)772-4247.
The information in this article was obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.