Key Takeaways
- Expert insights on earthquake insurance guide
- Actionable strategies you can implement today
- Real examples and practical advice
Earthquake Insurance Guide: Who Needs It, What It Costs, and How to Choose the Right Policy
Standard [[homeowners insurance](/blog/homeowners-insurance-complete-guide)](/blog/homeowners-insurance-complete-guide) doesn't cover earthquake damage. Not a single dollar. If a 6.5 magnitude earthquake strikes and your foundation cracks, your chimney collapses, and your walls shift off their footings, your HO-3 policy will deny the claim. This isn't a technicality — it's a blanket exclusion written into every standard homeowners policy in America.
Yet only 13% of [California](/blog/california-heloc-guide) homeowners carry earthquake insurance, and the number drops below 5% in other seismically active states. Most homeowners are gambling that the big one won't happen during their ownership period. For many, that's a reasonable bet. For others, it's a catastrophic mistake.
This guide helps you determine which category you're in — and if you need coverage, how to buy it intelligently.
Who Actually Needs Earthquake Insurance?
Not everyone does. Earthquake insurance is expensive, carries high deductibles, and may not make financial sense for every homeowner. Here's the decision framework.
You Likely Need Earthquake Insurance If:
-
You live in a high seismic risk zone — California (especially Southern California, Bay Area, and along the San Andreas, Hayward, or Cascadia faults), Pacific Northwest (Washington, Oregon), parts of Utah, Nevada, South Carolina (Charleston area), Tennessee/Missouri (New Madrid fault zone)
-
Your home is your primary financial asset — If your [home equity](/blog/equity-vs-appreciation) represents more than 40% of your net worth, an uninsured earthquake loss could be devastating
-
You carry a mortgage — While lenders don't require earthquake insurance (unlike [flood insurance](/blog/hurricane-insurance-guide) in FEMA zones), losing your home while still owing $300,000 creates a financial catastrophe — you'd be paying a mortgage on a uninhabitable home
-
Your home is vulnerable to earthquake damage — Older homes (pre-1980), unreinforced masonry, cripple wall foundations, homes on hillsides, and homes on soft soil (liquefaction risk)
-
You couldn't rebuild without insurance — If you don't have $200,000–$500,000+ in liquid assets to fund a rebuild, you need the coverage
You May Not Need It If:
- Your home is in a low-seismic zone with minimal historical activity
- You own your home free and clear and have significant liquid assets
- Your home is newer construction built to modern seismic codes
- Your home is a modest value relative to your total net worth
- You're in a low-risk structure type (single-story wood frame on a flat lot with a bolted foundation)
Earthquake Risk by Region
Earthquake risk isn't limited to California. The USGS identifies significant seismic hazard across multiple regions.
Highest Risk Areas
| Region | Major Fault Systems | Last Significant Event | Estimated Probability (30 yr) |
|---|---|---|---|
| Southern California | San Andreas, San Jacinto, Elsinore | Northridge 1994 (6.7) | 60%+ chance of M6.7+ |
| San Francisco Bay Area | Hayward, San Andreas, Calaveras | Loma Prieta 1989 (6.9) | 72% chance of M6.7+ |
| Pacific Northwest | Cascadia Subduction Zone | 1700 (est. M9.0) | 10–15% chance of M9.0 |
| Salt Lake City, UT | Wasatch Front | 1934 Hansel Valley (6.6) | Moderate–High |
| Memphis/St. Louis | New Madrid Seismic Zone | 1811–1812 (est. M7.5–8.0) | 7–10% chance of M6.0+ |
| Charleston, SC | Charleston Fault Zone | 1886 Charleston (7.0) | Low–Moderate |
Seismic Risk Factors Beyond Location
Your home's vulnerability matters as much as your ZIP code:
| Factor | Higher Risk | Lower Risk |
|---|---|---|
| Foundation | Unreinforced masonry, unbolted cripple wall | Bolted to slab, reinforced concrete |
| Structure type | Brick, stone, unreinforced concrete | Wood frame |
| Stories | Multi-story, soft-story (parking below) | Single story |
| Soil type | Soft soil, fill, liquefaction zones | Bedrock, firm soil |
| Age | Pre-1980 (pre-modern seismic codes) | Post-2000 |
| Hillside | Yes (landslide risk) | Flat lot |
Earthquake Insurance Costs
Earthquake insurance is significantly more expensive than other property endorsements, and pricing varies enormously based on location, construction, and soil conditions.
Average Annual Premiums by State
| State | Avg. Annual Premium | Coverage Amount | Typical Deductible |
|---|---|---|---|
| California (CEA) | $800–$5,000+ | $300K–$600K dwelling | 5–25% of dwelling |
| California (private) | $600–$4,000 | $300K–$600K dwelling | 5–20% of dwelling |
| Washington | $400–$1,500 | $300K–$500K dwelling | 10–15% of dwelling |
| Oregon | $300–$1,200 | $300K–$500K dwelling | 10–15% of dwelling |
| Utah | $200–$800 | $250K–$400K dwelling | 10–15% of dwelling |
| Missouri | $100–$400 | $200K–$350K dwelling | 5–15% of dwelling |
| Tennessee | $100–$350 | $200K–$350K dwelling | 5–15% of dwelling |
| South Carolina | $100–$300 | $200K–$350K dwelling | 5–10% of dwelling |
California drives the market. Roughly 75% of all earthquake insurance policies in the U.S. are sold in California. The state's unique risk profile and the existence of the California Earthquake Authority (CEA) make it the most developed earthquake insurance market in the country.
Factors That Affect Your Premium
In approximate order of impact:
- Seismic zone — Distance from active faults and historical seismicity
- Soil type — Soft soil and fill amplify shaking; liquefaction zones are surcharged
- Construction type — Wood frame is cheapest; unreinforced masonry is most expensive
- Foundation type — Bolted to slab (cheapest) vs. raised foundation vs. cripple wall (most expensive)
- Year built — Pre-1980 homes cost 50–150% more than post-2000 homes
- Number of stories — Each additional story increases premium
- Dwelling coverage amount — Higher coverage = higher premium
- Deductible percentage — Higher deductible = lower premium
- Retrofit status — Seismically retrofitted homes receive significant discounts
CEA vs. Private Earthquake Insurance
California homeowners have two primary options: the California Earthquake Authority (CEA) or private carriers. Each has distinct advantages.
California Earthquake Authority (CEA)
The CEA is a publicly managed, privately funded organization that provides earthquake insurance through participating insurers. It's the largest residential earthquake insurer in the world.
CEA Policy Options (as of 2025–2026):
| Feature | Homeowners Choice | Homeowners Premium |
|---|---|---|
| Dwelling coverage | Up to replacement cost | Up to replacement cost |
| Personal property | $5,000–$200,000 | $5,000–$200,000 |
| Loss of use | $1,500–$100,000 | $1,500–$100,000 |
| Deductible options | 5%, 10%, 15%, 20%, 25% | 5%, 10%, 15%, 20%, 25% |
| Building code upgrade | Not included | Included |
| Base premium | Higher | Higher |
CEA Pros:
- Backed by $22+ billion in claim-paying capacity
- Available through most California homeowners insurers
- Rate-regulated (can't arbitrarily increase premiums)
- Established claims process
- Retrofit discounts available (up to 25%)
CEA Cons:
- Historically limited personal property and loss of use coverage (though expanded in recent years)
- High deductibles (minimum 5% of dwelling, with many homeowners choosing 10–15%)
- No coverage for outbuildings, pools, patios, or landscaping
- Premium is relatively high for the coverage provided
Private Earthquake Insurance
Several private carriers now compete with the CEA, including Palomar, GeoVera, Arrowhead, and Jumpstart.
Private Carrier Advantages:
- Lower deductibles — Some offer 5% or even flat-dollar deductibles ($10,000–$25,000)
- Broader coverage — May include pools, patios, fencing, landscaping
- Loss of use — Often more generous than CEA
- Contents coverage — Higher limits and better terms
- Parametric options — Jumpstart pays a flat amount based on earthquake magnitude near your home, regardless of actual damage (fast payout, no adjuster needed)
Private Carrier Disadvantages:
- Financial capacity — Private carriers typically have smaller claim-paying reserves than the CEA
- Rate flexibility — Can increase premiums more aggressively
- Market exit risk — Private carriers can leave the California market (as some have)
- Underwriting restrictions — May decline high-risk homes the CEA would cover
CEA vs. Private: Side-by-Side Comparison
| Factor | CEA | Private |
|---|---|---|
| Claim-paying capacity | $22+ billion | Varies ($500M–$5B typically) |
| Lowest available deductible | 5% of dwelling | 2.5–5% or flat dollar |
| Personal property coverage | Up to $200K | Often higher limits |
| Loss of use | Up to $100K | Often higher limits |
| Pool/patio/landscaping | Not covered | Often covered |
| Premium range (avg. CA home) | $1,500–$4,000 | $800–$3,500 |
| Retrofit discounts | Yes (up to 25%) | Varies |
| Rate stability | More stable (regulated) | Less predictable |
Recommendation: Get quotes from both the CEA (through your homeowners insurer) and at least two private carriers. Compare deductibles, coverage breadth, and total cost. For high-risk zones and expensive homes, the CEA's financial strength may be worth the premium difference.
Understanding Earthquake Deductibles
Earthquake deductibles work differently from standard homeowners deductibles. Instead of a flat dollar amount, earthquake deductibles are a percentage of your dwelling coverage.
How Percentage Deductibles Work
If your home is insured for $500,000 with a 15% earthquake deductible:
- Your deductible = $75,000 (15% × $500,000)
- If earthquake damage totals $100,000, you pay $75,000 and insurance pays $25,000
- If earthquake damage totals $60,000, you pay the entire amount (under deductible)
- If earthquake damage totals $400,000, you pay $75,000 and insurance pays $325,000
Deductible Selection Strategy
| Deductible | Best For | Trade-Off |
|---|---|---|
| 5% | High-risk zone, older home, limited savings | Highest premium (often 40–60% more than 15%) |
| 10% | Moderate risk, some savings available | Moderate premium, moderate out-of-pocket |
| 15% | Standard choice for most homeowners | Balanced premium and deductible |
| 20% | Lower-risk zone, newer construction | Lower premium, higher out-of-pocket |
| 25% | Catastrophic-only coverage desired | Lowest premium, but only covers major events |
The math: On a $500,000 dwelling, the difference between a 10% deductible ($50,000) and a 15% deductible ($75,000) is $25,000 in additional out-of-pocket exposure. If the 10% deductible costs $600/year more in premium, it takes 41 years to break even. The 15% deductible is usually the better financial choice unless you're in an extremely high-risk area.
Seismic Retrofitting: Reduce Risk and Premiums
Retrofitting your home to better withstand earthquakes is one of the few ways to simultaneously reduce your risk and your premium.
Common Retrofits and Their Impact
| Retrofit | Cost | Premium Reduction | Risk Reduction |
|---|---|---|---|
| Foundation bolting | $3,000–$7,000 | 5–10% | High |
| Cripple wall bracing | $3,000–$7,000 | 10–20% | Very high |
| Chimney bracing | $1,500–$4,000 | 2–5% | Moderate |
| Water heater strapping | $50–$200 | Minimal | Low (fire prevention) |
| Soft-story retrofit (multi-unit) | $50,000–$200,000 | 10–20% | Very high |
The CEA Brace + Bolt Program offers grants up to $3,000 for qualifying retrofit work (foundation bolting and cripple wall bracing) on pre-1980 California homes. Demand exceeds supply, so register early when applications open.
Los Angeles soft-story ordinance: L.A. requires retrofit of vulnerable soft-story apartment buildings (typically wood-frame with parking on the ground floor). If you own a multi-unit property in L.A., compliance is mandatory — and carries significant costs but meaningful insurance savings.
What Earthquake Insurance Doesn't Cover
Even with earthquake insurance, significant exclusions apply:
- Land damage — Sinkholes, landslides, and land movement beyond the structure
- Tsunami (separate from earthquake shaking) — Treated as flood, requires flood insurance
- Fires following earthquake — Actually covered by your standard homeowners policy (fire is a covered peril regardless of cause)
- Vehicle damage — Covered by comprehensive auto insurance
- Masonry veneer — Some policies exclude cosmetic masonry damage
- Pre-existing damage — Cracks or settlement that existed before the earthquake
Important note on fire following earthquake: After the 1906 San Francisco earthquake, more damage was caused by the subsequent fires than by the shaking itself. Your standard HO-3 policy covers fire damage even if the fire was caused by an earthquake. This is a critical coverage that many homeowners don't realize they already have.
Earthquake Insurance Decision Checklist
Use this checklist to make your decision:
Assessment
- What is my seismic zone? (Check USGS hazard maps at earthquake.usgs.gov)
- What is my soil type? (Check local geological surveys)
- When was my home built? (Pre-1980 = higher risk)
- What is my construction type? (Wood frame = lower risk)
- Is my foundation bolted to the slab?
- What percentage of my net worth is home equity?
- Do I carry a mortgage?
Financial Analysis
- What would it cost to rebuild? (Replacement cost estimate)
- Could I fund a rebuild without insurance? (Liquid assets ≥ replacement cost?)
- What is the annual premium for a 15% deductible policy?
- What is 15% of my dwelling coverage? (This is my out-of-pocket in a claim)
- Does the premium + potential deductible make financial sense vs. self-insuring?
Policy Selection
- Have I compared CEA and at least two private carriers?
- Have I evaluated deductible options and their premium impact?
- Does the policy include adequate personal property coverage?
- Does the policy include loss of use / additional living expenses?
- Have I considered retrofitting for premium discounts?
Key Takeaways
- Standard homeowners insurance covers zero earthquake damage. This is a complete exclusion, not a partial one.
- Location is important but not everything. Soil type, construction, foundation, and building age matter as much as proximity to fault lines.
- The deductible is the real cost. A 15% deductible on a $500,000 home means $75,000 out-of-pocket. Budget for this.
- CEA vs. private isn't clear-cut. CEA offers superior financial backing; private carriers often offer broader coverage and lower deductibles. Get quotes from both.
- Fire after earthquake IS covered by your standard homeowners policy. You don't need earthquake insurance for post-quake fire damage.
- Retrofitting pays twice — in reduced premiums and reduced damage in an actual earthquake. Investigate the CEA Brace + Bolt program if eligible.
- Earthquake insurance is catastrophic coverage. It's designed to prevent financial ruin from a major event, not to cover every crack in the drywall. Set your expectations accordingly.
The decision to buy earthquake insurance is ultimately a personal risk assessment. If losing your home to an earthquake would financially devastate you, the $800–$5,000 annual premium is a reasonable price for that protection. If you can absorb the loss, self-insuring may make mathematical sense. Either way, make the decision deliberately — not by default.
Related Articles
- [[Home [Equity Explained](/blog/home-equity-explained)](/blog/what-is-home-equity): What It Is and How to Build It](/blog/home-equity-explained)
- Blended Family Home Planning: Merging Households and Managing Home Equity
- [How to [[Build Home Equity](/blog/equity-building-strategies) Faster](/blog/build-home-equity-faster): 8 Proven Strategies](/blog/build-home-equity-faster)
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