California Earthquake Insurance: Requirements, Coverage, Cost

• While earthquake insurance is optional in California, home insurers must offer it to new homebuyers. 
• Earthquake insurance covers your dwelling, personal property, and provides loss-of-use coverage.
• You can purchase earthquake insurance through your homeowners insurance provider. 

California has a well-earned reputation as the earthquake capital of the US. Yet only 10% of California residents have earthquake insurance, according to the Federal Emergency Management Agency (FEMA). Many homeowners are underprepared for financial losses associated with earthquakes, which are not covered by standard

homeowners insurance

policies. If you’re a Californian living near a major fault line, you can protect yourself with earthquake insurance.

Is earthquake insurance required in California?

California homeowners are not legally obligated to buy earthquake insurance, and

mortgage lenders

don’t require it, says Glenn Pomeroy, chief executive officer of the California Earthquake Authority (CEA), the nation’s largest earthquake insurance provider. However, California law makes it mandatory for providers like State Farm and Allstate to proactively offer earthquake insurance in conjunction with a homeowners insurance policy to new homebuyers, according to Pomeroy.

Homeowners insurance will not cover earthquakes. You must purchase a separate policy to get coverage. Given the large number of damage-causing earthquakes in California each year, it is wise to carefully consider doing so. 

Here are a few things you should take into account to determine if you need an earthquake insurance policy, according to the United States Geological Survey (USGS):

• Your home’s location from active earthquake faults
• The frequency of earthquakes in your region
• When the last earthquake occurred 
• The materials on your home’s building and foundation
• The architectural structure of your home
• The quality of workmanship of your home

What does earthquake insurance cover in California?

Earthquake insurance covers the cost of replacing and repairing your dwelling and home contents after an earthquake. It will also cover any additional living expenses you incur if your home becomes temporarily uninhabitable. 

Earthquake insurance only covers losses that are caused by land movement or landslides. It will not cover fire and water damage. Your homeowners insurance policy covers that. Earthquake insurance won’t pay for flood damage, which requires separate coverage.

How much does earthquake insurance cost in California?

“Earthquake insurance can cost anywhere from $730 to $2,000,” Pomeroy says. The cost varies based on several factors, such as your home’s and construction material. Earthquake insurance is not available as a standalone policy and must be purchased in tandem with your homeowners insurance policy. 

Deductibles for earthquake insurance are usually 5% to 15% of your earthquake insurance policy limit, according to the Insurance Information Institute. They’re generally higher than deductibles for a homeowners insurance policy. 

While earthquake insurance can be quite costly, especially in high-risk areas, you can still reduce your premiums through mitigation efforts. The CEA, for example, offers a discount for older, wood-framed homes with raised or other non-slab foundations. Many providers also offer discounts for seismically retrofitted homes. 

How to buy California earthquake insurance

The CEA advises taking these steps to purchase insurance in California. 

Step 1: Know your risk

Knowing how prone your area is to earthquakes is the primary consideration when determining if you need earthquake insurance. FEMA offers seismic maps that show this. The colors on the maps indicate the risk levels of an area, also known as seismic design categories.

Source: FEMA

Step 2: Get a free cost estimate

The cost of your policy will vary based on several factors. You can obtain a premium estimate using the CEA’s free premium calculator. 

You will be asked a series of questions about your home, such as your address, the year your home was built, how much homeowners coverage you have, and the type of roof and foundation your home has. 

Then, you’ll see your estimated monthly premium. You can adjust your deductible, personal property, loss-of-use coverage, and add coverage to your policy if you wish.

Step 3: Call your insurance company

You must purchase an earthquake insurance policy through your residential insurer. Once you get your earthquake insurance estimate, speak with your insurance agent, and they will process your application.

Your provider will also manage your premium payments and policy renewals. Additionally, they can help you file a claim if an earthquake damages your property. 

Note that most insurers will not sell new policies for a certain amount of time after an earthquake occurs — usually 30 to 60 days, according to the National Association of Insurance Commissioners. The best time to buy a policy is before an earthquake happens.