How to Compare Earthquake Insurance in California

If you live in California, a state that has significant seismic acitivity, do not assume that your homeowners insurance will provide coverage for earthquake hazards. If you want earthquake insurance in this state (which is not mandatory), you must buy separate insurance. However, the California Earthquake Authority (CEA) has found that almost 85 percent of the homeowners in the region do not have separate earthquake insurance. Nonetheless, it is good idea to get earthquake insurance in California. Comparing different policies will help you choose the appropriate insurance coverage.

Difficulty: Moderately Easy

Instructions

1. Estimate the value of your home and belongings. Get a professional appraiser, if you face any problems. As a first step, you should evaluate your assets and then consider buying appropriate coverage.

2. Compare each insurance policy for the total extent of coverage. Does the policy provide coverage only for the home or also for the valuables in it? Does the policy pay for additional costs such as hotel charges or transportation that may occur due to temporary relocation?

3. Compare each policy for the detailed clauses on exclusions or limitations. Read the entire policy document when comparing different quotes.

4. Compare for costs. Depending on the quality of your home, its earthquake resistance ability and age, the costs of your policy will vary. A lot depends on the material used for construction. Wood offers better resistance to earthquakes as compared to bricks and stones.

5. Compare policy costs for various locations. Earthquake prone areas are usually graded on a scale of 1 to 5. Depending on the severity of the quake grade, the policy deductible is likely to increase or decrease. In California, the deductible can range from 10 to 20 percent of the total limit depending on the grade of the location.

6. Compare the quotes of private insurance companies with those offered by the CEA. Visit the CEA Web site to learn more and compare different policies (see Resources). You can also use the Web site to calculate your estimated annual premium.

Tips & Warnings

• Consider the coverage limit before comparing different policies.
• You can buy a Basic to Comprehensive plan depending on your needs.
• Make sure the coverage includes all costs of remodeling or rebuilding your home.
• Discuss with your neighbors or people living in surrounding areas about their earthquake insurance. They will be able to provide better insight.
• Check your homeowners insurance policy and see if by adding a rider you can buy separate earthquake insurance.