Earthquakes are a big part of California, but this does not stop people from building, buying, renting places, and living their lives
Everyone in California should consider purchasing Earthquake Insurance, which ranks among the most critical coverages. California boasts over 2000 known faults spanning the state, making it one of the highest-risk regions for earthquakes in the US. The state itself is synonymous with seismic activity. According to the Uniform California Earthquake Rupture Forecast, there is a 99.7% likelihood of a 6.7M+ earthquake striking California within the next 30 years. Given the belief that California is overdue for a major quake, the anticipation of a significant event looms large.
Earthquakes have the potential to cause extensive damage, even leading to the complete destruction of homes. Unfortunately, your standard Homeowners, Condo, Landlord, or Renters insurance policy excludes damages resulting from earthquakes. Hence, purchasing Earthquake Insurance becomes crucial for safeguarding your property in this high-risk state.
How To Be Prepared For An Earthquake
To prepare for an earthquake and mitigate potential damage and financial hardships, consider taking the following steps:
- Purchase Earthquake Insurance.
- Retrofit Your Home: Strengthen your home’s structure by bolting it to the foundation, bracing the chimney and water heater, installing automatic gas shut-off valves, and reinforcing cripple walls using plywood. These measures enhance your home’s resilience during an earthquake.
California Earthquake Authority (CEA)
In California, most Earthquake Insurance policies are acquired through California Earthquake Authority (CEA), which issues the policy through participating insurance carriers.
Earthquake policy aligns its effective and expiration dates with your primary property insurance. If you buy Earthquake coverage midway through your Homeowners policy term, the premium will be prorated accordingly. When your Homeowners policy renews, Earthquake insurance adjusts to match the renewal Dwelling coverage limit and policy dates.
The policy is pretty basic and does not include fancy bells and whistles like a Homeowners policy. Earthquake insurance is designed to address catastrophic claims rather than minor fixes.
Depending on the location of your property, this type of Insurance can be pricey. However, opting for a higher Deductible can make it more affordable.
Deductibles in Earthquake policies are calculated based on a percentage of your Dwelling coverage limit. Lower deductible options are available, such as 10% and even as low as 5%. To reduce your premium, you can choose a higher deductible of up to 25% – make sure you would be comfortable paying this amount in the event of a loss.
Typically, you would have the option to select from the following coverages:
Building coverage pays for damages to the dwelling. Landscaping, pool, fences and separate buildings are excluded from Earthquake policies.
The Deductible part we have discussed above applies to the Building coverage.
Personal Property Coverage
Personal Property Coverage pays for damages to your belonging. You must remember that many of your belongings are not covered – some examples are china and crystals, artworks such as paintings and sculptures, trees and plants, and some other personal belongings.
Personal Property coverage has its own Deductible limit, separate from Dwelling coverage Deductible. You can select the Deductible amount as a percentage in 5, 10, 15, or 25% increments.
Loss of Use Coverage
Additional Living Expenses coverage is also known as Loss of Use. This valuable component of your Earthquake Insurance policy covers the extra costs you may face when circumstances require you to relocate and live elsewhere temporarily. Loss of Use coverage will compensate you up to the limit you have chosen at the time of purchase.
You can add a few other optional coverages to the policy that offer great benefits at the time of the claim.
Please contact us for a free quote or a consultation about Earthquake Insurance today.