Earthquake Insurance: Do You Need It and Is It Worth the Cost?
How do you know if you need earthquake insurance? GOBankingRates spoke with Gus Garcia, director of personal lines contracts at Farmers Insurance, to learn more about what earthquake insurance does for homeowners and renters and the most common myths surrounding earthquake insurance.
What is Earthquake Insurance?
Earthquake insurance is a separate endorsement or policy, depending on the state, for coverage from damages caused by an earthquake to your home and belongings. Typically, earthquakes aren’t covered by a standard homeowners policy.
“Earthquake insurance covers your home and belongings specifically for the peril of an earthquake,” said Garcia. “Without an earthquake policy, if an earthquake struck your area and damaged your home, any repair costs would have to come from your pocket.”
Common Myths About Earthquake Insurance
There are several myths associated with earthquake insurance. Below are some of the most common myths, debunked.
Myth: I don’t have to worry about earthquake insurance because it’s part of my standard homeowners policy.
No, it is not. “Earthquake coverage is typically provided via a separate endorsement or policy, and loss due to earthquake is not usually covered by a standard homeowners policy,” said Garcia.
Myth: Earthquake insurance is too expensive.
“We’ve all seen how devastating earthquakes can be. Rebuilding on your own after an earthquake can be far more expensive, time consuming and potentially unmanageable when considering all of the other unexpected issues that can arise after a natural disaster,” said Garcia.
Myth: Earthquakes only happen in California.
You don’t need to live on the West Coast to experience an earthquake. Garcia said many areas of the country are susceptible to earthquakes.
“The New Madrid fault zone, which extends from northeast Arkansas to southern Illinois, produced some of the strongest earthquakes in North America during the early 1800s. The East Tennessee and Central Virginia Seismic Zones can also produce damaging earthquakes, not to mention states like Oregon, Washington, Nevada, Hawaii, Alaska, Wyoming, Idaho, Montana, Oklahoma and northern Texas, to name a few,” said Garcia.
Myth: I don’t own a home, so I don’t need earthquake insurance.
You might not own a single-family home, but what if you rent or own a condo? Your personal property can still get damaged by an earthquake and a standard rental or condo policy won’t pay for damages caused by an earthquake.
Garcia said most earthquake policies and endorsements also provide loss of use/additional living expenses. These coverages can help pay your rent or mortgage if you are not able to live in your residence while it’s being repaired due to earthquake damage.
Myth: I only own a car, so earthquakes don’t impact me.
Garcia said earthquake damage is covered under auto policies, but you still need to choose the right coverage.
“Comprehensive auto coverage will be needed to cover damage to your vehicle if an earthquake causes damage to your car. For example, a tree or pole falls on your car from an earthquake, or if the garage caves in on your car as a result of the earthquake. Without comprehensive auto coverage you likely will not have coverage for the damage to your car as a result of the earthquake,” said Garcia.
Still not sure which coverage is best for your vehicle? Garcia recommends speaking with an agent to learn about every option available to you and make the choice that fits your unique needs.
How Much is Earthquake Insurance?
The price of earthquake insurance will vary depending on the state you live in and your specific needs. Garcia recommends contacting a local agent. This is helpful for reviewing current coverages and determining whether your home or apartment is protected the way you want.
Speaking with a local agent can also help determine your risk, the cost to add earthquake coverage and provide assistance to make the appropriate choices for your unique circumstances.
Why Earthquake Insurance is Worth the Money
Earthquakes devastate entire cities and communities, leaving many in the population left to rebuild what remains. Garcia said earthquake insurance may be worth the money when you take into account costs associated with rebuilding on your own after an earthquake, how time consuming it can all be and how potentially unmanageable things can get when considering all of the other unexpected issues that can arise after a natural disaster.
Speak with your local agent to ask any other questions you may have about earthquake insurance and get the answers you need specific to your situation.
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