Is Earthquake Insurance Worth It? Here Are 6 Reasons Why It Is

By Adam Bakonis and the Mercury Team

Imagine the ground beneath you begins to tremble, and in a matter of moments, the solid foundation you rely on is compromised. The walls crack, the roof shifts, and suddenly, your home has suffered serious damage. In situations like these, earthquake insurance can make all the difference for the safety of your family and your home.

“The damage from a quake can be sudden, severe, and expensive to repair,” says Adam Bakonis, Sr. Manager, Product Management. “And standard homeowners policies typically don’t cover it. Having added coverage can be the difference between having the funds to recover and facing a major financial disaster.”

What Is Earthquake Insurance and What Does It Cover?

Earthquake insurance is designed to help pay for damage caused by seismic activity, which can include major structural losses that standard homeowners insurance usually leaves out. According to the United States Geological Survey, nearly 75% of the U.S. could experience damaging earthquakes, with California, the Pacific Northwest, and Alaska most at risk. So it can be exceptionally important to invest in insurance where earthquakes are more common and repair costs can be steep.

What earthquake insurance typically covers

Earthquake insurance typically helps cover damage to your home’s structure, attached structures like garages, and often personal belongings damaged in the quake. Many of these policies also include additional living expenses if your home is unsafe to live in after a covered event.

What standard homeowners insurance usually doesn’t cover

Most standard homeowners policies do not cover earthquake damage, even if the quake causes serious cracking, shifting, or structural collapse.

Do I Need Earthquake Insurance? Key Risk Factors to Consider

How do you know if you even need earthquake insurance? “That will largely depend on where you live, how your home is built, and how much financial risk you can absorb on your own,” adds Adam Bakonis, Sr. Manager, Product Management. Here are three key risk factors:

Living near active fault lines

California, for instance, has well-known fault lines and a history of earthquake damage, so it’s a no-brainer to get earthquake insurance if you live in one of these high-risk areas.

Home construction type and location

If you have an older home, a house built on unstable soil, or a home with a weaker foundation, it may be more vulnerable to earthquake damage. Location also matters because hillside or cliffside properties, soft ground, and dense urban areas can increase the risk of severe losses.

Personal financial risk tolerance

If paying for major repairs out of pocket would strain your savings, earthquake insurance may be a smart safeguard. The right decision often comes down to whether you want to transfer a potentially catastrophic loss to an insurer.

6 Reasons Earthquake Insurance May Be Worth It

Still on the fence? Earthquake preparedness is key — and that often includes insurance coverage. We’ve got six pretty compelling reasons as to why you should at least consider earthquake insurance:

1. Standard homeowners insurance typically excludes earthquake damage

Earthquake insurance helps cover major structural damage to your home, including foundation shifts, cracked walls, roof damage, and buckled floors. If the damage is severe enough, it can also help pay for rebuilding your home.

2. Earthquake repairs can be extremely expensive

Earthquake damage can range from cracked foundations to collapsed walls, broken chimneys, and major utility line damage. In severe cases, the total repair bill can rival the cost of rebuilding part or all of the home. Earthquake insurance can help greatly mitigate these costs.

3. Coverage may help pay for rebuilding or major structural repairs

Earthquake insurance can help cover the cost of repairing or rebuilding your home after a covered quake. That kind of protection matters most when the structure itself is compromised and the damage is too large to handle through savings alone.

4. Policies may include coverage for personal belongings and temporary living expenses

Earthquake insurance can help cover temporary housing costs if your home is damaged enough that it’s unsafe to live in. That means you may have support for a hotel, rental, or other place to stay while repairs are being made. It also can cover your clothing, electronics, furnishings and other household items you lost as a result of the earthquake.

5. Earthquake risk is higher in some regions, especially California

Since California is one of the most earthquake-prone states in the country, homeowners there often purchase earthquake insurance because the probability of a damaging event is meaningfully higher than in many other states.

6. Coverage can help protect long-term financial stability

A major seismic event can wipe out your savings, increase debt, and delay your other financial goals for years and years. Insurance can help reduce that risk by shifting part of the loss to the insurer instead of forcing you to absorb it all yourself.

Is Earthquake Insurance Worth It in California?

Yes, earthquake insurance is worth it if you’re a California resident. The combination of active fault lines, dense housing, and high rebuilding costs can make even a single earthquake financially devastating.

Why earthquake risk is higher in California

California sits on major fault systems, including the San Andreas Fault, which makes earthquakes a recurring threat. That geological reality means homeowners in the state have a much greater chance of experiencing damaging seismic activity than homeowners in many other parts of the U.S.

Why many homeowners consider additional protection

Many California homeowners buy earthquake insurance because the cost of repairing structural damage can be huge, and standard home insurance typically doesn’t fill that gap. Even with deductibles and coverage limits, having a policy can make the difference between a manageable setback and a financial crisis.

How to Decide if Earthquake Insurance Is Right for You

If you’re thinking about adding earthquake insurance, the good news is that it’s a pretty straightforward process. Start by asking your current homeowners insurance company if they offer any options for earthquake coverage. Even if they don’t, they may refer you to one that provides it.

Reviewing your existing coverage

Whether or not you ultimately end up getting the added coverage, it’s a good idea to check your homeowners policy so you understand exactly what’s excluded. Then look at whether you already have savings set aside for a major disaster and whether that amount would realistically cover structural repairs, belongings, and temporary housing.

Talking with an insurance agent about risk and options

An insurance agent can help you compare deductibles, coverage limits, and policy features for your home and location. This is especially helpful if you live in a higher-risk area or own an older home that may be more vulnerable to quake damage.

If you live in California, you can purchase earthquake insurance from the California Earthquake Authority through your Mercury agent. We also offer homeowners insurance that can be tailored to fit your needs, ensuring you’re covered from all angles.

Contact us today for a fast, free quote!

FAQs About Earthquake Insurance

How does the deductible work for earthquake insurance?

Earthquake insurance deductibles are usually a percentage of your home’s insured value, often between 5% and 25%. This means you’ll pay more out of pocket before coverage applies, so these policies are mainly designed for major damage.

Can renters get earthquake insurance coverage?

Yes, renters can buy earthquake insurance to help protect personal belongings like furniture and electronics. Some policies may also cover temporary living expenses if your rental becomes uninhabitable.

Does earthquake insurance cover damage to my car?

No, earthquake insurance doesn’t cover vehicle damage. Instead, this is typically covered under the comprehensive portion of your auto insurance policy.