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Should You Purchase Earthquake Insurance?


The decision whether to purchase earthquake insurance is a difficult one. Homeowners must choose between paying more for coverage or having no coverage for what could be a very catastrophic event. Many homeowners have no earthquake coverage even when living in an area such as ours where there is a possibility of a significant magnitude earthquake occurring some time in the next several decades. Given the increasing values of homes, the decision to purchase earthquake insurance should be appropriately considered.

Homeowners typically decline earthquake coverage for several reasons. Many believe that their regular homeowner’s policy will cover any losses resulting from an earthquake. In most cases this is not accurate, since earthquake and earth movement are specifically excluded from coverage. Other homeowners decide not to purchase earthquake coverage because they feel that the cost of the coverage plus the standard deductible makes the coverage too expensive. There are others who believe that if there is a disaster, the government will help them rebuild their house. This is a risky and often inaccurate assumption.

So should you save the money or spend it on an earthquake policy? Since an earthquake has the potential to completely destroy your home, you need to decide if that is a risk you are willing to take without having insurance to help rebuild. No coverage means that in a devastating event you may have to pay the full cost of rebuilding while still paying the mortgage on a home you can’t live in, plus the costs of living elsewhere. By electing to forego earthquake coverage you will save money on premiums, but you are also gambling that a significant earthquake will never occur. There is no one-size-fits-all right answer. This is a personal decision each homeowner should consider based on personal circumstances and risk tolerance.

If you are wondering about earthquake insurance, give us a call. We would be happy to help you evaluate what makes the most sense for you and your family.