Possibly the most important thing to know about earthquake insurance is this: A basic homeowners policy does not cover earthquake damage. Even if you don’t live in an area where earthquakes are common, it’s possible you might need earthquake insurance. Although homeowner, condo and rental insurance policies do not cover damage caused by an earthquake, coverage can be purchased as an endorsement or a separate policy. Earthquake insurance can be quite inexpensive depending on where you live. Contact your insurance agent or company to find out what the costs would be for your home.
Earthquakes have occurred in 39 states since 1900, and about 90% of Americans live in areas considered seismically active. Yet only a small percentage of people purchase earthquake insurance.
Even in California, where earthquake fears are a daily fact of life, only about 12 percent of homeowners have earthquake insurance, according to the California Earthquake Authority (CEA), down from 30 percent in 1996 when the state legislature created the CEA.
Each year, more homeowners get rid of earthquake coverage than buy it because, according to consumer groups, they believe the policies cost too much and cover too little.
According to the U.S. Geological Survey, there is a 70 percent probability that one or more damaging earthquakes of magnitude 6.7 or larger will strike the San Francisco Bay area during the next 30 years. (A magnitude 6.7 earthquake is equivalent to the 1994 Northridge, Calif., earthquake that killed 57 people and caused $20 billion worth of damage.)
