Earthquake Insurance for California Homeowners

A lot of people find this out too late. A standard homeowners policy in California leaves out earthquake damage. If the ground shakes and the house cracks, slides off its foundation, or has to come down, your homeowners policy won't pay to fix it. Earthquake insurance is a separate policy, added alongside the one you already have.

The biggest reason people call us about it is their equity. If a quake badly damages your home and you have no earthquake coverage, you still owe the mortgage. The house you've been paying down for years could need tens of thousands, or hundreds of thousands, of dollars in repairs before anyone can live in it again. Earthquake insurance is what stands between that damage and your savings.

Clients also tell us they worry that California is past due for a big one. Scientists don't predict the day, but they do estimate the odds. The U.S. Geological Survey puts the chance of at least one magnitude 6.7 or larger earthquake in the San Francisco Bay Area before 2043 at 72 percent (USGS). That's the number that makes most people stop and ask about coverage.

This is the question we get most, and it's a fair one. An earthquake deductible works differently from the deductible on your homeowners policy.

Most earthquake deductibles are a percentage of your dwelling coverage, not a flat dollar amount. Here's an example of the math. If your home is insured for $500,000 and you choose a 15 percent deductible, you'd cover the first $75,000 of damage to the house yourself, and the policy pays the rest up to your limit.

That sounds like a lot, and it is. So why do people still buy it? Because earthquake insurance is built for the loss you can't recover from, not the cracked tile. In a serious quake, damage to a home can run far past the deductible. Being on the hook for $75,000 is hard. Being on the hook for the whole house is harder.

This matters most if you own your home outright. All of that equity is yours, and without earthquake coverage, all of it is at risk. A deductible is an amount you can plan for, save toward, or, if you had to, borrow. Nobody wants to take out a loan, but it's an option. There's no loan that replaces a whole house you weren't insured for.

Many policies let you choose your deductible. A lower percentage means a higher premium, and a higher percentage lowers the cost. We walk through a few options with you, with real numbers for your home, so you can pick what fits your budget.

Policies differ, and the policy wording always decides. Most earthquake policies can include:

• The house itself, to repair or rebuild after quake damage.
• Your belongings, often as an option you can add or leave off.
• Somewhere to live while the home is being repaired, often called loss of use.

Some policies also offer help with things like emergency repairs or building code upgrades. We go through the coverages with you before you sign anything, not after, so you know what's in the policy and what isn't.

The office is in Pleasant Hill, and the Bay Area is where earthquake questions come up most. The Calaveras fault runs through the San Ramon Valley, and the Concord fault runs through Concord. We help homeowners in Pleasant Hill, Walnut Creek, Concord, Lafayette, Martinez, San Ramon, Alamo and Danville.

We also insure homes in the foothills and mountains, in Tuolumne, Calaveras, El Dorado and Nevada counties. If you own a second home up there, ask us about earthquake coverage for it as well.