Do you need earthquake insurance? If you live in Los Gatos, Saratoga, San Jose, or anywhere in Silicon Valley, you are probably aware that it is very likely that we’ll experience a violent temblor within the next 30 years. The San Francisco Bay Area is woven with a number of different faults, some very active, others quiet for thousands of years: San Andreas, Hayward, Calaveras, San Gregorio, Greenville, Silver Creek, Monta Vista – Shannon, and many more.
Earthquake insurance could be required by your lender if you are purchasing property in a high risk area. For most people, though, earthquake insurance is optional, and there are 3 main considerations in that decision.
The first consideration is risk – how likely are you to need earthquake insurance coverage?
What are the odds of a very severe earthquake in the Bay Area?
I looked up the stats on the USGS site, and there’s a 72% chance of an earthquake of 6.7 on the Richter Scale or more between now and 2043. The most likely area is the Hayward fault (33%), followed by the San Andreas (22%), per this USGS report.
On that same report, page 1, it says there’s a 98% chance of a 6.0 quake somewhere in the Bay Area between now and 2043. So it’s wise to take it seriously (this is reminding me to update my emergency supplies!) Click the image below to go to the pdf referenced above.
Not every area is equally prone to severe shaking, though all of Santa Clara County would likely feel a strong jolt. Liquefaction zones will feel more movement than those not in such areas with sandy soil. The Loma Prieta quake rocked our Cambrian house, but it was unharmed. Had the shaking been more violent, it may have been a different story. Landfill areas like parts of Santa Cruz and San Francisco had devastating impacts, though.
We are pretty much guaranteed another strong seismic event.
Second consideration: what is covered?
Earthquake insurance covers the structure and may not include the contents of the home. The point of it is to make sure you can rebuild or repair after a major quake.
There are separate policies or riders for possessions, but primarily for the essentials, not the frills. Things such as fine Belleek china (which we lost in the 1989 Loma Prieta shaking) will not be covered.
You can purchase extra coverage for loss of use, building code upgrades, and emergency repairs. See the CEA page on homeowner’s insurance for those choices.
Like all insurance policies, there are deductibles.
Third: what does earthquake insurance cost?
Your premium for earthquake insurance varies based on many factors, including the age of the home, whether or not it is bolted to the foundation, the size of the structure, the exact location, etc.
For instance, if you buy a house in the Santa Cruz Mountains which sits directly on top of the San Andreas Fault, or in Fremont along the Hayward Fault, you would expect to pay more than if you were many miles away from either of these areas.
Further, the amount of your deductible will impact the cost, too – the lower your deductible, the higher your premium.
Most people who obtain this type of insurance will get it from the State of California (even if it’s offered via their regular insurance agent). Here’s a great resource for info from the California Department of Insurance.
There’s a link on the page above that goes to the actual CA state insurance site, and there you’ll find a CEA premium calculator.
More resources on earthquake insurance
Consumer Reports article from 2014: Should you buy earthquake insurance, is it worth it?
MarketWatch article from 2014, updated June 2016: Despite quakes, most California homeowners don’t have earthquake insurance
What is a cripple wall? (on this site)