Earthquake Insurance in California: Know What to Expect
California experiences many minor earthquakes on a regular basis, although most of this seismic activity causes little damage. Big quakes, however, cause massive damage, including wiping out blocks of buildings. The state has had major quakes in the past century in both Northern and Southern California. Here are important points to know about earthquake insurance in California.
Coverage offered by earthquake insurance
Homeowners’ insurance plans don’t come with earthquake coverage, which is an endorsement you must buy separately. What your earthquake insurance covers does not overlap with your home insurance policy. The main items an earthquake plan protects are dwelling and personal property. It also provides additional living expenses (ALE) or loss of use if you have to temporarily vacate your home due to a disaster.
The coverage limits are stated on the policy, as each insurance agency designs its own plans. Personal property, which is often covered for up to $200,000, includes furniture, appliances, computers, clothes, and other personal belongings. If you have something of questionable value, such as jewelry or antiques, it’s helpful to get it appraised by your insurer.
What is not covered
Earthquake insurance doesn’t cover all damage that results from an earthquake, such as fire and flooding. If your home burns down, it may be covered by the standard plan. If it’s destroyed by a flood, existing flood coverage will pay to restore your home. Other items that an earthquake plan probably won’t cover include damage to swimming pools, fences, separate structures, and gardens.
This specialized insurance also won’t cover land or landscaping damage. Anything that’s breakable is less likely to be covered unless you purchase a special insurance endorsement for it. Damage to your vehicles will also not be covered, but they will probably be covered by your auto insurance plan.
Who needs earthquake insurance coverage?
Any owner with property near a fault line in California should consider earthquake insurance. Areas with a history of recurring seismic activity, such as the Los Angeles and San Francisco metropolitan areas, should seriously consider earthquake insurance coverage since risks are fairly high.
Entrepreneurs thinking about launching a business in California should first consider where to locate the business and if they can even afford the insurance in an earthquake zone. Paying insurance is about creating a safety net for risks, so if you operate from an area prone to earthquakes, be aware this expensive coverage is essential.
One of the key issues to think about as a homeowner is coverage limits. When damage exceeds a policy’s coverage limits, you have to pay the balance out of your own pocket. It helps to assess the value of all your assets so you know how much coverage you need.
How to get earthquake insurance?
If you need earthquake insurance in California, you can get it through the California Earthquake Authority (CEA), although third-party brokers also sell it. It can be purchased through the same carrier you have for homeowners insurance. Renters should also consider purchasing this coverage, which probably isn’t included in their renters’ insurance policy.