Standard home insurance covers many types of natural disasters, but earthquakes are usually not covered. The policyholder usually must buy specific earthquake insurance. Severe earthquakes are not that common, so insurance agencies make coverage optional. The likelihood of a big earthquake depends on where you live. California and Washington are at higher risk to experience a serious earthquake.
A major difference between earthquake coverage and standard home insurance is the deductible. Standard homeowner’s policies offer deductible levels based on monetary amounts, such as $500. You can choose an affordable deductible. In contrast, deductibles for earthquake policies are a percentage of the policy limit. If your earthquake policy limit is $500,000 and you choose a deductible of 15%, then it means you are responsible for as much as $75,000.
For example, if your home and belongings are lost in a fire or a tornado, they are covered for replacement up to a certain amount. Earthquake coverage is different, and will replace a small set amount. This is because the aftermath of an earthquake usually causes less damage to a home than a fire.
Speak with an insurance agent to see if you need earthquake insurance. The agent will help you determine what is best for your situation.