Owning a home is a great achievement for any individual, but it comes with a slew of new responsibilities that can quickly become overwhelming—particularly if you are a first time homeowner. Today we are going to address an insurance question that has become increasingly common from new homeowners: do I need earthquake insurance? The short answer: maybe. The long answer requires a bit more explanation, so let’s start at the beginning.
The majority of homeowners purchase a standard homeowners insurance policy and leave it at that. As far as they are concerned, that homeowners policy should cover any issues that arise from their home. It is called a homeowners insurance policy after all. Unfortunately, not all homeowners policies are the same, which means different policies cover different things. As it turns out, most standard homeowners policies do not include any kind of earthquake coverage. That means that if you want coverage, you will either have to purchase an earthquake coverage endorsement or an completely separate earthquake policy.
So, do you actually need this coverage? It depends on where you live. If you live in California you absolutely need earthquake coverage. However, it may surprise you to learn that many U.S. states other than California are at risk for earthquakes.The U.S. Geological Survey reported that between 2002 and 2012, earthquakes of 4.0 or higher magnitude were reported in 23 different U.S. states. Do your research, if you live in an area that is prone to earthquakes, it’s probably worth your time to get some sort of earthquake insurance coverage.
The amount of earthquake coverage you need is going to vary depending on a number of factors. The most important one to consider when buying a policy is the total cost of completely rebuilding your home. In the worst case scenario, you want to make sure your insurance policy can cover what you need it to.
It’s also worth taking the time to do a complete inventory of all of the belongings in your home. That way you can more accurately estimate the cost of replacing anything that gets lost in the event of a catastrophic earthquake. Depending on what you have, it could be worth taking the time to have a professional appraiser come in and assess the value of your belongings for you.
Yes, earthquake insurance can be expensive. Premiums tend to range from $1,000 to $5,000 a year, depending on the amount of coverage you need. Most earthquake policies also come with fairly high deductibles, which means you will have to pay a decent amount out of pocket before your coverage kicks in. With that in mind, it probably would not make sense to invest in an earthquake policy if you don’t own your home outright. If you do, and you live in an area that experiences earthquakes, it’s probably worth the investment, Remember, if you don’t have a policy and lose your home to an earthquake the cost of rebuilding your home and replacing your valuables will have to come out of your own pocket.
If you are interested in an earthquake policy, or just want to assess the state of your current insurance policies, we encourage you to reach out to the staff at TGS Insurance. TGS Insurance employees are experts in the insurance space and are always willing to work with you to find the right policy for your needs, and your budget. Visit www.tgsinsurance.com to learn more.