Earthquake Insurance for California Residents: Is It Worth It?

Depending on where you live in the Golden State, earthquake insurance may be a necessity.

Jamie Johnson
Written byJamie Johnson
Jamie Johnson
Jamie Johnson
  • 6 years experience in personal finance writing

  • Featured on Credit Karma and Insider

Jamie is a meticulous researcher who has published 2,000+ personal finance articles. Her expertise is trusted by major brands like Bankrate and Rocket Mortgage.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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Updated February 13, 2024 at 11:00 AM PST

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Even a small earthquake can cause significant damage to your home and belongings, but a standard homeowners insurance policy doesn’t cover earthquake damage.[1] So if you live in an area where earthquakes are common, you should probably consider earthquake insurance.

California experiences 90% of the country’s earthquakes, yet only 10% of residents have earthquake insurance, according to the Federal Emergency Management Agency. Understanding how earthquake insurance works and where to purchase it will help you determine whether this coverage is right for you.

Quick Facts
  • California has almost 16,000 known earthquake faults, so it’s likely that most California property owners will experience an earthquake.[2]

  • Earthquake insurance pays for damage to your home and belongings from an earthquake.

  • Without earthquake insurance, you’re responsible for paying for any damages to your home and belongings — and possibly paying for additional living expenses.

What is earthquake insurance?

Earthquake insurance provides coverage for your home and belongings if they’re damaged in an earthquake. Depending on your policy, it may also pay for additional living expenses while your home is being repaired.

Hazard insurance, a standard part of homeowners policies, doesn’t cover earthquakes. However, if an earthquake causes a fire that damages your home, homeowners insurance will cover that.[3]

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What earthquake insurance covers

Californians are at an increased risk for experiencing damaging earthquakes, according to the United States Geological Survey’s hazard model. If you’re on the fence about purchasing earthquake coverage, it can help to look at the main components of your policy.

  • illustration card https://a.storyblok.com/f/162273/x/a0c151e1ba/accidental-tearing-apart-cracking-etc.svg

    Dwelling

    If you have homeowners insurance, you’re probably already familiar with dwelling coverage. This coverage pays to repair or rebuild your home if it’s damaged in an earthquake. This coverage includes your home and any attached structures, like a garage.

  • car in carage

    Other structures

    Earthquake insurance should also cover structures that aren’t attached to your home. For example, if you have a detached garage or shed on your property, this structure should be covered under your policy.

  • illustration card https://a.storyblok.com/f/162273/100x100/32ed42213e/personal-property.svg

    Personal property

    Earthquake insurance also pays to replace personal belongings that are damaged in an earthquake. This includes items like dishes, appliances, musical instruments, and pictures, though some items may only be covered up to a certain limit.

  • illustration card https://a.storyblok.com/f/162273/100x100/c61ab9bfc2/loss-of-use-2.svg

    Additional living expenses

    Additional living expenses — also known as loss of use coverage — pays for alternative living arrangements while your home is undergoing repairs. For example, it could help you pay for hotel costs, meals, and laundry services while your home is temporarily uninhabitable.

What doesn’t earthquake insurance cover?

Earthquake insurance doesn’t pay for everything. Here are some commonly excluded items:

  • Fire: Earthquake insurance won’t pay for damages caused by a fire since this is something your homeowners insurance policy covers.

  • Land: Earthquake insurance won’t pay for damages to your land, like sinkholes, but you may be able to buy additional coverage to restore your land.

  • Vehicles: You’ll have to check your auto insurance policy to see if it covers damage to your vehicles from earthquakes.

  • Water damage: Earthquake insurance won’t cover water damage caused by flooding, sewer or drainage backup, a tsunami, or other natural disasters.

What to know about California earthquake insurance

Despite how common earthquakes are, state law doesn’t require California residents to purchase earthquake insurance. However, if you have homeowners insurance in California, your insurer must offer to sell you earthquake insurance every other year.

The California Earthquake Authority (CEA) provides most earthquake insurance policies. The CEA is a not-for-profit organization and one of the world’s largest providers of residential earthquake insurance. You’ll purchase a policy from an insurance company that’s a member of the CEA.

Is California earthquake insurance worth it?

Earthquakes can happen anywhere in the United States, but California is especially vulnerable. Anyone living in the Bay Area, Central Coast, Central Valley, the Sierra Mountains, or Southern California is at the highest risk of experiencing an earthquake. And most Californians live within 30 miles of an active fault line, according to the California Earthquake Authority.

Even a minor earthquake can cause major damage to your home and belongings, and without earthquake insurance, you’re responsible for covering 100% of these costs. So if you live anywhere in the Golden State, you should consider purchasing earthquake insurance.

Some people are hesitant to purchase earthquake insurance because it can get expensive, especially if you live in a high-risk area. A variety of factors determine your premiums, including your home’s age, proximity to a fault line, and foundation type.

Good to Know

Certain types of homes may qualify for a premium discount. If your home was built before 1980 with wood-frame construction, you may qualify for a 25% discount, for example.[4] You may also be eligible for a discount if your home has been properly retrofitted and has a raised foundation or a full or partial basement.

Earthquake insurance for renters

It’s not just homeowners who need earthquake insurance — renters can also benefit from this coverage. Like homeowners insurance, a standard renters insurance policy won’t pay for damages caused by an earthquake. In addition, your landlord’s policy will only cover the structure of the building and won’t pay to replace your belongings.

Earthquake insurance for renters covers your belongings and additional living costs if your home is damaged or destroyed in an earthquake. As such, you should consider whether you have the funds to replace your belongings or pay for temporary housing after an earthquake.

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California earthquake insurance FAQs

As a California resident, it’s likely a matter of when — not if — you’re going to experience an earthquake. And even a smaller earthquake can cause significant damage to your home and belongings. To help you better determine if earthquake insurance is right for you, consult the answers below.

  • What are the cons of earthquake insurance?

    The biggest downside to earthquake insurance is that it can be very expensive for homeowners living in high-risk areas. If you live close to a fault line, you could pay thousands of dollars per year for earthquake insurance.

    And earthquake insurance deductibles tend to be much higher than what you’d pay for a standard homeowners insurance policy. The Insurance Information Institute found that a typical deductible for earthquake insurance was between 5% and 10% of the policy limit.[3]

  • Where do you buy earthquake insurance?

    If you need to purchase earthquake insurance, you can start by contacting your current homeowners or renters insurance company. Your insurer should be able to set you up with a CEA insurance policy, and you don’t have to wait until your policy renews.

  • Is there earthquake insurance for your car?

  • Does AAA offer earthquake insurance?

    Yes, AAA contracts with the CEA to offer earthquake insurance to California homeowners and renters. The average earthquake insurance policy costs $850 per year, according to AAA.

    However, the exact costs will vary depending on the age and location of your home. Make sure you shop around and compare quotes from several insurers so you can find the best terms and lowest rates on your policy.

Sources

  1. FEMA. "Earthquake Insurance." Accessed January 29, 2024
  2. California Earthquake Authority. "Home Page." Accessed January 29, 2024
  3. Insurance Information Institute. "Earthquake insurance for homeowners." Accessed January 29, 2024
  4. California Earthquake Authority. "Does Your House Qualify for a CEA Policy Discount?." Accessed January 29, 2024
Jamie Johnson
Jamie Johnson

Jamie Johnson is a Kansas City-based personal finance writer whose work has been featured on several of the top finance and business sites in the country, including Insider, Credit Karma, Bankrate, Rocket Mortgage, Fox Business, Quicken Loans, and The Balance. For the past six years, she's dedicated more than 10,000 hours of research and writing to more than 2,000 articles about personal finance topics.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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