4 Questions to Help You Shop for Earthquake Insurance

November 06, 2020 by Dan Green

Every earthquake insurance policy is unique. Pricing is based on the size of your home and its address; and, the amount of stuff you want to insure.

It’s smart to shop around when you’re looking for an earthquake insurance policy. Where you find the cheapest earthquake insurance will depend on what you want your insurance to cover.

Here are four questions to help you get the most affordable earthquake insurance you can.

1. If an earthquake strikes your home, how much damage could you repair using your personal bank account?

When earthquakes hit, they can be costly. A collapsed garage can crush a car. A cracked foundation can require immediate repairs.

A person who makes an insurance claim after an earthquake, though, won’t get all the money that’s requested. Instead, the insurance company pays the money requested, minus the size of that person’s deductible.

A deductible is the amount of cash an insurance company withholds from an insurance claim. It’s the insured person’s out-of-pocket expense when something goes wrong.

When you sign up for earthquake insurance, you can choose the size of your deductible.

Earthquake insurance deductibles are different from deductibles used for homeowners insurance, renters insurance, and auto insurance, which are fixed dollar amounts. With earthquake insurance, deductibles are percentages. They’re a percentage of your total available coverage.

For example, if your car insurance offers $25,000 in comprehensive coverage, which protects against random events which damage your car, your 10% earthquake insurance deductible would be $2,500.

The larger your earthquake insurance deductible, the less you’ll pay for earthquake insurance.

If you have more than ten thousand dollars available in an emergency fund, you could probably handle a deductible of fifteen or twenty percent, which will lower the cost of your insurance.

Otherwise, opt for a smaller deductible of 10 percent. You’ll pay more for earthquake insurance with a ten percent deductible, but you’ll get more cash when an earthquake affects your life.

2. Are you willing to risk NOT having earthquake insurance?

Forty-two states have a measurable risk for earthquakes nationwide, with 16 states considered “high risk”. High risk states are those which have experienced a major earthquake in recent years.

When an earthquake hits, the damage can be huge. Roofs can collapse, walls can crumble, and cars can be crushed. And, none of this damage is covered by homeowners insurance or auto insurance.

The costs of your repairs will come from your bank account. Plus, you’ll still be responsible for paying your mortgage while you rebuild your home.

Earthquake insurance is never required. But, unless you live in a state that’s at low-risk for an earthquake — and those states are North Dakota, Minnesota, Wisconsin, Missouri, and Florida — getting earthquake insurance can be smart, defensive move.

3. Would you move all of your insurance policies to one company in order to get a big discount?

You can get discounts on your insurance when you consolidate your coverages.

This is because insurance companies reduce rates for customers with two or more active insurance policies. It’s a pricing policy known as bundling.

When you bundle insurance, you can use your existing auto insurance policy to earn a discount on your earthquake insurance. The same is true for your homeowners insurance or your renters insurance.

It’s common to get discounts of 25 percent or more when you bundle but make sure check with multiple insurance companies. Different companies offer different-sized discounts for bundling.

4. Does your homeowners insurance already include coverage for earthquake damage?

Earthquake insurance is typically sold as an add-on to homeowners or renters insurance; or, to auto insurance. Earthquake insurance is separate coverage for protection against losses from an earthquake.

But, not always.

Insurance companies sometimes include earthquake coverage as part of their standard insurance coverage, which means that to buy an additional earthquake insurance policy would be redundant.

When your primary insurance policy names earthquakes as a covered peril, there’s no reason to carry additional earthquake insurance. Damage from an earthquake will be covered.

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