Earthquake Insurance: Watch the Deductible

Earthquake coverage is excluded from standard homeowners policies and must be bought separately, usually as an endorsement or a standalone policy. The feature that surprises people most is the deductible: instead of a flat dollar amount, it is expressed as a percentage of the home's insured value, which turns a modest-looking number into a large bill.

How percentage deductibles work

A 15 percent deductible on a home insured for $400,000 means you pay the first $60,000 of damage yourself. That is a very different proposition from a $1,000 standard deductible, and it is the reason many homeowners who buy earthquake coverage still find a claim expensive.

Your cost on a claim = insured value × deductible percentage

What earthquake policies typically cover

• Structural damage to the dwelling from shaking.
• Damage to personal belongings from the quake.
• Loss of use if the home becomes uninhabitable.
• Sometimes masonry veneer and specific non-structural elements, depending on the policy.

What raises the premium

• Proximity to an active fault line.
• Older construction, or a home not bolted to its foundation.
• Unreinforced masonry, which performs poorly in earthquakes.
• Lower deductibles, which raise the premium meaningfully.

Mitigation lowers the cost

Retrofitting - bolting the house to the foundation, bracing cripple walls, strapping the water heater - can reduce both the damage a quake causes and, with some insurers, the premium. It is often the highest-value money a homeowner in an active zone can spend.

Frequently asked questions

Is earthquake insurance required? It is not required by law, but a mortgage lender may require it in a high-risk area.

Is high-deductible coverage worth it? It protects against the catastrophic case - a total or major loss - which is precisely the scenario a homeowner cannot absorb alone.

Estimate your premium and deductible with the calculator below.