Should You Blow Your Cash on Earthquake Insurance?

Posted May 28th, 2010
by HomeownersInsurance.org Staff (1 comment)

Everybody knows that homeowners insurance is a worthwhile investment. If you have a home loan, you’re required to carry homeowners insurance by the lender. But, even if you own your home outright, you need to be covered in case disaster strikes.

Now, when you think about disaster striking your home, you probably think about a tree falling and smashing your roof, or some other such disaster. You might think about earthquakes – which aren’t covered under your normal homeowners insurance policy. You probably don’t think about the most common types of homeowners insurance policy claims – liability claims and theft. Those two things, if nothing else, are the reason you need to be covered.

But, do you really need the other stuff? Let’s say you live in California. Do you need to have earthquake insurance?

Some people say “No.”  They argue that earthquakes are so rare as to not really be a concern. In some places in California, of course, that’s pretty true. In other places that are especially prone to quakes, it may not be true.

One of the big factors in earthquake insurance is the deductible. If you have a deductible of $1,000, for example, even an earthquake-prone area might not require earthquake insurance. Unless the quake is big enough to cause structural damage, the fact of the matter is that the insurance isn’t going to replace a single cracked window or a broken vase.

Currently, less than one in five homeowners in California have earthquake insurance. You might want the peace of mind that comes from having it, and if you have the cash to spare then it’s probably just fine. But for most folks, it probably isn’t a necessity.

Now, if you decide not to invest in earthquake insurance because of reading this blog, understand something: we’re not saying your house won’t be hit by an earthquake, or that you shouldn’t buy it. We’re just saying that it’s an individual decision that you need to make for yourself.

Photo via U.S. Geological Survey

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  • Posted July 24th, 2010 by Ruby Clifton at 8:20 pm - Reply

    You may need to go in for Earthquake Insurance, only if you’re living in high seismic earthquake prone area.


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