Earthquake Insurance Basics

Standard homeowners and renters insurance does not cover earthquake damage. Earthquake coverage is available in the form of a separate policy or an endorsement from most private insurers and, in California, the California Earthquake Authority (CEA).
A homeowners or renters policy will, however, generally cover losses from fire following a quake. If the fire makes the home unlivable, there may also be coverage for additional living expenses should it be necessary to live away from your home while it is being repaired.
Earthquake insurance is, of course, important to have if you live near a fault line. But keep in mind that earthquakes can also have widespread impact, affecting areas far from major fault lines. If your house is at any risk from quake-related shaking, damage to foundations, wall collapses and contents could result and you may want to consider buying an earthquake insurance policy.
Cars and other vehicles are covered for earthquake damage under the optional comprehensive part of an auto insurance policy.
Rates for earthquake insurance can vary significantly—from relatively high in earthquake-prone areas to fairly inexpensive in lower risk areas. Many earthquake insurance plans have higher deductibles than standard homeowners or renters insurance. A deductible is that portion of a claim that the policyholder pays out-of-pocket. Earthquake deductibles are usually from 5 to 15 percent of the policy limit.
The not-for-profit California Earthquake Authority (CEA) insures about 10 percent of the homes in California. The CEA offers coverage for the structure of the house, building code upgrades and emergency repairs. It also provides separate coverages for belongings (with a separate, lower deductible) and additional living expenses (with no deductible). Policyholders can choose the additional coverages and deductibles they want.
The I.I.I. recommends asking yourself the following questions when considering whether you need earthquake coverage:
If the answer is no, then you may want to consider getting earthquake insurance. To find out whether earthquake insurance is available in your area, contact your insurance professional or your state insurance department. If you are thinking about buying a home in an earthquake-prone location, first look into the cost of insurance coverage as this will provide a broader financial picture of the true cost of owning that home.
Source : Insurance Information Institute
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