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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 serious damage to homes. In 1989, the Loma Prieta earthquake leveled neighborhoods and did billions in damage.
Insurance can be a lifesaver, and if a disaster occurs, like an earthquake, a significant relief that the coverage was purchased. Some uncovered homeowners were left financially devastated. Those with solid earthquake coverage were able to 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 require being utterly ready in the event 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 to help you define your decision and save money.
While it’s tough 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. In California, homeowners must get solid home insurance coverage, with median home prices hovering above 800,000 in 2021. For many people, their home is their single biggest investment.
In California, your Homeowners Policy won’t cover your Home from Damages resulting from Earthquakes
This insurance is entirely different from a standard automobile policy, which you can alter and upgrade. With earthquake coverage, your policy is figured regarding a percentage based on the deductible amount. You need to purchase a separate policy.
How Much Does Earthquake Insurance in California Cost?
On average, 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 on 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.
Get a free online quote in minutes to get the best earthquake insurance in California. Start by entering your zip code and filling out a short application. Some people not near a major fault line and have their homes 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 essential coverage added on.
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 of 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.
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.
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.
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 bring it up to 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
With our Citizens home insurance website, you can compare quotes and select the best option. However, if you need to add 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.