How to Get Earthquake Insurance Living on a Fault Line

When you love your home and cherish everything in it, you want to protect it. However, if your home is located on an earthquake fault line, this greatly narrows down your options when it comes to getting a homeowner's insurance policy against earthquakes. However, it is still possible to get earthquake insurance for such a high-risk area.

Instructions

1. Determine the amount of coverage you need. This is the rebuilding and replacement cost of your home and property, not the market value of the home.

2. Ask around. Talk to other homeowners who live in the same area and find out where they have obtained their earthquake insurance, if they have any. Don’t be surprised if not many people have this coverage. In California, for example, only 12 percent of the population has this type of insurance.

3. Call your current insurance company and inquire whether they offer earthquake insurance. This coverage is not always advertised by insurers, so you may have to ask for it. Get a quote for the rates.

4. Shop around. Call different insurance agencies and get quotes for earthquake insurance. Once you get the quotes, compare the rates and deductibles that are offered by the various insurers before you purchase coverage.

5. Find out exactly what is or is not covered. Some points to consider: Is it only the house, or does it include other buildings such as a garage or guesthouse? Does it also include your belongings inside the house? Will living expenses during the time you’re rebuilding be covered? Is there any fine print with limits or exceptions? Get answers to these questions to truly compare the quality of coverage.

6. Take into account the deductible on the earthquake insurance quotes. The deductible on an earthquake policy is typically 10 percent. This deductible applies separately to the structure of your home, and the contents such as furniture, clothing and electronics). For example, given a $300,000 home with contents worth $100,000, you are responsible for 10 percent of the cost of the home ($30,000), and 10 percent the cost of the contents ($10,000). The earthquake insurance policy will only pay out if the damage exceeds these amounts.

7. Check with the earthquake authority of your state. This entity, such as California's Earthquake Authority, usually will offer a “mini policy” to help people be able to afford insurance, but it doesn’t cover non-essentials such as swimming pools or basketball courts. Get a rate quote for this insurance and compare it to the costs and coverage offered by private insurers.

8. Make your choice on where to purchase your earthquake insurance. Once you pay the premium, your insurer will mail you an offer of coverage. You will have up to 30 days from the mailing date to accept the offer of earthquake insurance coverage.

Tips & Warnings

• Your homeowner’s insurance doesn’t cover earthquakes and the government funding is in the form of a loan, which you will have to repay.

• Make sure it’s absolutely clear before you sign what your rights are for filing claims. Don’t wait until after the earthquake, when you might have an unpleasant surprise.