Earthquake Insurance: Do I Need It?

Lenore Staats

Photo by Sunyu Kim on Unsplash California is well known for having more than one earthquake every now and again. Like every other natural disaster, the ramifications of an earthquake for California residents range from insignificant to catastrophic. For the most part, California residents do not seem to be all […]

Earthquake Insurance

Photo by Sunyu Kim on Unsplash

California is well known for having more than one earthquake every now and again. Like every other natural disaster, the ramifications of an earthquake for California residents range from insignificant to catastrophic. For the most part, California residents do not seem to be all that concerned about having protection against an earthquake for their home and property.

This is evidenced by the fact that only around 10% of California homeowners have added an earthquake policy to their homeowner’s insurance recently. Although California has not experienced any major earthquakes in the last few decades, residents should be aware that the risk is always there

The Costs

Earthquake insurance is not really that expensive in the grand scheme of things. Depending on the area in which you reside, earthquake insurance costs an average of $800 each year. However, there are some outliers that might be quite a bit higher than that price point. You can actually use an estimator to guess how much you might spend monthly on earthquake insurance for your home.

Further, you can actually customize your plan for earthquake insurance and drive the cost down if you are not happy with the price that you are quoted. This concept is similar to car insurance; you can remove coverage for certain things in favor of a lower monthly bill if you wish.

How Do I Know If I am at Risk?

Understanding your home’s risk factor is a little bit complicated. You should start by evaluating where your home is in relation to the fault line.

Understanding your home’s risk factor is a little bit complicated. You should start by evaluating where your home is in relation to the fault line. Further, learning about the type of land that you are sitting on and the quality of the materials that were used to build your home will also prove beneficial.

Shouldn’t Homeowner’s Insurance Cover It?

Typically, homeowner’s insurance does not cover earthquake damage. You should take a look at your individual policy to verify what your insurance does and does not cover in terms of natural disasters. Instead, you need to look into California earthquake insurance.

Will Renter’s Insurance Cover an Earthquake?

Renters must actually add the clause of an earthquake to their policy in order to be sure that their property is protected in this event. However, it is not the responsibility of the renter to insure the home itself, the renter only needs to worry about the property that they keep inside the home.

Why Do People Choose Not to Have Earthquake Insurance?

Earthquake insurance is not required by any agency. In fact, even a mortgage company will not usually require a homeowner to purchase an earthquake policy unlike a flood policy. This is one of the major reasons that many California homeowners do not buy an earthquake policy.

Secondly, while earthquakes are common in California, they are not usually catastrophic. The damage that the typical earthquake does is not anything that Californians are often too worried about. However, there are those earthquakes that are much stronger – and much more unexpected – so the ones who have the insurance are likely more realistic the possibilities.

The Bottom Line

So, while earthquake insurance is not required by any of the governing entities. Including mortgage companies and the actual government, it is actually wise to purchase a plan. Imagine what you would do in the very worst of situations. If you lost your home and all of your possessions without insurance, would you be able to pick up the pieces and find a way to make it financially?

Some people might be able to answer yes to that question. However, plenty of the families living around this country do not have enough money in their savings account to cover the cost of a $1,000 emergency. Imagine if they came across an emergency that costed them hundreds of thousands of dollars?

It is always preferable to be safe rather than to be sorry. Investing a few dollars each month into the safety and well-being of your family and their home is well worth it in the long run. Having the peace of mind to know that you are covered for some of life’s biggest emergencies is the best feeling in the world. After all, if you do not want to wind up homeless, then you should definitely consider getting that insurance.

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