If you are getting ready to purchase a house in the Golden State, you might wonder whether or not you need to get earthquake insurance in California added to your policy or if it makes sense financially.
Most people find it hard to remember the last time a major quake hit the golden state and caused severe damage. Adding earthquake coverage might seem like a waste of money for many people on a tight budget, but is it?
The reality for homeowners in California is earthquakes do happen, and big ones can cause severe damage to homes. In 1989, the Loma Prieta earthquake leveled neighborhoods and did billions in damage.
This insurance can be a lifesaver, and if a disaster occurs, like an earthquake, a significant relief that the coverage was purchased. Some uncovered homeowners, and were left financially devastated. The house that had solid earthquake coverage could rebuild and avoid financial ruin.
For most California Homeowners, Earthquake Coverage is Essential
You might assume you can get away without adding on earthquake coverage but is that a smart move? While it can save you money in the short term, you could be in serious financial trouble if a big quake hits.
Every few decades, on average, California experiences massive earth earthquakes that do major structural damage to buildings, roadways, and bridges. The reality is California has around 10,000 quakes every year. While 99% of these are tremors in the range of 3.0 and smaller, more than 15 are higher than a magnitude of 4.0.
A big one seems to happen every 10-12 years that could devastate your home. With this in mind, you must be utterly ready if one hits. You should carefully consider adding earthquake insurance in California to your policy. It could save you from financial devastation if one of these tragic natural disasters hits. Let’s review some details that will help you define your decision and save you money.
While it’s difficult to predict when a quake above 6.5 will occur, you can control your home insurance coverage. That means adding on earthquake coverage and protecting the investment you have made. For many people, their home is their single biggest investment. In California, with median home prices hovering above 800,000 in 2021, homeowners must get solid home insurance coverage.
In California, your Homeowners Policy won’t cover your Home from Damages resulting from Earthquakes
You need to purchase a separate policy. With earthquake coverage, your policy is figured regarding a percentage based on the deductible amount. This insurance differs entirely from a standard automobile policy, which you can alter and upgrade.
How Much Does Earthquake Insurance in California Cost?
California earthquake insurance costs about $800 per year or about $67 per month. However, that’s just the average of insuring all properties. Many factors go into the cost of premiums, including:
- If the property is on or near a fault line
- If the property had sustained previous earthquake damage in the past
- The value of the property
- Does the property have a reinforced foundation to protect against earthquake damage?
- The age of the property
Adding California earthquake coverage for a small home worth $240,000 in the high desert near Nevada will cost much less than insuring a home worth $3 million next to a fault line.
Some people not near a major fault line and have their home paid off choose to go without earthquake coverage and hope for the best. It makes financial sense for homes worth $500,000 or more to get the vital coverage added on. To get the best earthquake insurance in California, get a free online quote in minutes. Start by entering your zip code and filling out a short application.
How are your Policy and Deductible Calculated?
For illustration purposes, you insured your home for $300,000, and then $100,000 in-home damages result from a quake. You will be liable for paying a deductible (often 15% of the coverage you get) before the insurance company kicks in and spends the rest.
So you would, in this example, pay $45,000, and then the insurer would pay for the rest of the costs to repair your home. However, if you did not have quake insurance, you would be burdened with paying all the $100,000 in damages inflicted on your house.
Considering how much money getting covered could save you, it is a shock that only about 10% of California citizens homeowners carry this essential coverage.
Your Possessions
When you buy earthquake insurance in California, your home contents are covered by a fixed dollar amount, like $20,000. This makes sense because, unlike a fire, which can ruin everything inside your house and even more, an earthquake normally will not destroy all of your belongings. If you have expensive personal items like an HD camera valued at over $5,000, you might consider getting added coverage.
Exclusions
There will be some factors that insurers will exclude from being covered. These could include fencing, pools, and even other structures on your property, like a garage. Talk to your Citizens home insurance professional today to find out more.
Loss of Use
Limits on the loss of use can be much more restricted for earthquake insurance. Typically, like possessions, it will be set to an exact dollar amount – like $2,000.
Cost of Getting Coverage
This type of coverage can be costly, especially in areas prone to quakes, like along the San Andreas fault line. For earthquake insurance in California, typical rates are $15 for each $1,000 covered. So if you had a $1,000,000 home policy, this would be around $15,000. If you ever get hit by a massive quake that does significant damage, your home could be condemned and ruled a total loss. The proper protection could save you from financial devastation.
Getting Discounts on Your Policy
You can qualify for substantial discounts on your policy from the California earthquake authority if you retrofit an older home to meet current standards. This involves creating a stronger, more stable foundation and strengthening the walls. Not only will you improve your home’s safety and value, but you will also save on insurance. This makes total sense if you have an aging home.
Shop Online For Cheap California Earthquake Insurance
If you need to add this critical protection to your home, go online, and let Citizens Insurance help you find the cheapest earthquake insurance available. We search all the major insurers nationwide and give you up to 10 free online quotes in minutes. We have helpful agents standing by to clarify all of your inquiries. Get started now and get a better insurance rate for your home.