Opinion: Do you need earthquake insurance? Here are 6 questions to help you decide.

Ruiz is the director of strategic communication for The Insurance Information Institute, and lives in the Bay Area.

With the South Napa and Ridgecrest earthquakes in 2014 and 2019, respectively, receding from Californians’ collective memories, few people in the state focus on the threat posed by this type of natural disaster. Yet earthquakes can cause much harm to home structures. They can damage housing foundations and collapse walls. Even relatively mild tremors can destroy furnishings and belongings. Californians are encouraged to reduce their risk of earthquake loss and damage through education, mitigation and insurance.

Homeowners and renters insurance do not cover earthquake damage. A standard homeowners or renters policy will, however, generally cover losses from fire following a quake and, if such a fire makes your home unlivable, cover the additional living expenses incurred while you live elsewhere during repairs.

Earthquake insurance coverage is available in the form of a separate policy or an endorsement to an existing homeowners or renters insurance policy. To get more insights and to find out whether a stand-alone earthquake insurance policy is available in your area, contact your insurance professional or Google “California Department of Insurance: Insurers Offering Earthquake Coverage.”

In California, the risk for earthquake damage is significant. People should consider getting a policy that, at a minimum, covers the structure of the home, building code upgrades and emergency repairs. You can also get coverage for additional living expenses and personal property, and some companies even cover damaged swimming pools or masonry veneer. There are a number of earthquake insurance providers in California. Many of them are participating insurers of the California Earthquake Authority (CEA), but there are other non-CEA insurers that also provide great options to help protect you and your family from financial loss. CEA offers premium discounts to policyholders who have retrofitted, or strengthened, their older homes to help them better withstand shaking.

Determining if you need earthquake insurance is important. If you are thinking about buying a home in an earthquake-prone location, assess the cost of earthquake insurance coverage to understand the home’s true risks and the cost of insuring it.

Some questions to determine whether you need earthquake insurance:

Can you afford the cost of rebuilding or repairing your home if it is damaged by a quake?

Can you replace your personal belongings if they are damaged or destroyed by a quake?

Can you afford to pay for temporary housing and other expenses if earth movement-caused structural damage makes your home uninhabitable?

Is your home built to withstand an earthquake?

Is your older home retrofitted?

Rates for earthquake insurance can vary significantly, from inexpensive in lower risk areas to a relatively high cost in places that are more prone to earthquakes. Deductibles for earthquake insurance policies are higher than those in standard homeowners or renters insurance policies, with earthquake policy deductibles usually from 5 percent to 15 percent of the policy limit. For example, a home with an insured value of $300,000, and a 5 percent deductible, would have its earthquake insurance coverage take effect only after the first $15,000 of damage had been absorbed by the homeowner.

Note that cars and other vehicles are covered for earthquake damage under the optional comprehensive part of an auto insurance policy.

Earthquakes can be highly destructive, so you should also consider earthquake coverage for your commercial business. Commercial property insurance covers some natural events, such as wind damage, but you must purchase separate coverage if you want protection against earthquakes.

Your business earthquake policy will generally cover damage to your building and to your business property such as your inventory. Depending on the policy, lost business income caused by an earthquake may also be covered. Coverage begins when damage has exceeded your policy’s deductible. Earthquake insurance policies often have high deductibles, ranging from 2 percent to 20 percent of the insured value of your building, depending on its location, age and condition.

Your business property may have to undergo an inspection and upgrades before you can qualify for earthquake insurance. For instance, before your building can be insured against earthquakes, you may have to have the structure bolted to its foundation. You may also be required to brace chimneys and walls, as well as make other improvements.

The risk is real, but ultimately, the decision is yours.