Do You Need Earthquake Insurance?
Your home and your business are some of the largest investments you will ever make.
California is known as a hotspot for earthquakes. With multiple fault lines running through the state, it’s no wonder that earthquake insurance costs can be so pricey. In both personal and business insurance planning, it’s important to ask, “Do I need earthquake insurance?”
Unfortunately, most business and homeowner insurance packages do not include earthquake coverage, and investing in earthquake coverage can be costly.
Southern California, specifically, is typically at high risk for experiencing earthquakes. Earthquakes with a magnitude of 6 or greater may cause serious damage to areas that are densely populated.
How can you begin to prepare for an earthquake before it occurs? Do you have a disaster plan ready to go? Want to improve your earthquake preparedness? Read on for more.
how much does earthquake insurance cost?
Most homeowner and business insurance policies don’t cover earthquake damage, you will need to invest in an added layer of protection. Earthquake coverage is offered as a separate coverage option, in which you pay based on your location’s risk. If you’re in Southern California on the San Andreas fault line, your earthquake insurance costs will be much higher than if you’re in a lower risk area, far from any kind of fault line.
The NAIC states “the deductible for earthquake insurance is usually 10%–20% of the coverage limit. For example, if your home is insured for $200,000, a 10% deductible would be $20,000.”
what isn’t covered with earthquake insurance
As we mentioned above, most homeowners insurance fails to cover earthquake damage. Earthquake insurance is recommended if you live in an area that has a high risk of experiencing an earthquake. This coverage includes structures close to the house (i.e. a garage or shed).
As you look to invest in earthquake insurance, it’s important to understand where you may still need additional coverage.
Most items not covered under earthquake insurance, are surrounding what could occur after an earthquake occurs. For example:
- Vehicle damage
Damage to land is also not typically covered under your earthquake insurance. For example, if the earthquake caused a sinkhole to appear, that cost would not be covered by your earthquake insurance.
how your premium is determined
At the end of the day, your insurers determine your premium. There are a few factors that will impact your premium:
- Your home’s location
- The age of your home
- The construction of your home
- The cost to rebuild your home
- The deductible
How to stay protected
There are a few steps you can take to begin limiting the risk associated with earthquake damage to your business and your home, which can in turn lower your insurance premium.
earthquake survival kit
Start with an earthquake survival kit. Your office or home could be without electricity, internet, phone, water, gas, and sewage services when an earthquake hits. The American Red Cross gives a few items that should be included in your earthquake survival kit:
- Water: A two week supply of a gallon per person
- Food: Things that are non-perishable and easy to make
- Battery-powered radio
- First Aid Kit
- Any medications or medical items
- Multi-purpose tools
- Sanitation and personal hygiene items
- Personal documents: Medication lists, medical information, address, lease or deed to your home, passports, birth certificates, insurance
- Cell phones and chargers
- Emergency contact information
- Emergency Blanket
- Map of the surrounding area
Inform staff and family
Host regular staff meetings to discuss how your team can stay safe during an earthquake. Be sure everyone knows to drop, cover, and hold during an earthquake and proceeding aftershocks.
It’s important that they know that underneath furniture and against walls are likely the best places to be. Be sure to inform everyone to steer clear of windows and bookcases or large pieces of furniture.
All frames, mirrors, and large cabinets should be anchored to their foundation. Gas appliances and water heaters should be secured with wall studs.
retrofitting your property
One of the best ways to tackle your earthquake risk is to retrofit your property. As mentioned above, it’s important to have large furniture anchored down, and secured in case an earthquake does occur. Here are a few ways to get started retrofitting your property to decrease your risk of injury during a natural disaster.
- Bolting down bookcases, dressers, and televisions. Securing these heavy items, as well as other heavy items throughout your home can reduce property damage, and reduce the risk of injury during an earthquake.
- Secure and brace the water heater to the dwelling frame.
- Install automatic gas shut-off valves.
If you want to go even deeper into retrofitting your home, here are a few things you can do:
- Anchoring your house to the foundation through seismic bolting.
- Install bracing to cover cripple walls (in the space between the foundation and the floor where the crawl space is) with plywood.
We at benchmark commercial insurance company can assist you in finding the right coverage for your specific business and personal needs. With insurance costs rising, it’s important to understand ways in which you can start to stabilize or reduce your insurance costs, read one of our recent blogs, here.