Wednesday, August 24, 2011 1:29:03 PM

Does a standard home insurance policy cover damage caused by earthquakes?

A standard home insurance policy does not cover earthquake damage; however many companies offer it for an additional premium.

Insurance companies ordinarily offer earthquake coverage with a deductible equal to a percentage of the replacement cost of a structure. For example, a homeowner buys a policy with a 5 percent deductible on a home that would cost $200,000 to rebuild. The homeowner would pay the first $10,000 of an earthquake loss before the insurance company would pay a claim.

About 5,000 quakes strike the United States each year, according to the Insurance Information Institute. The Northridge earthquake, which struck Southern California in January 1994, was the costliest quake in U.S. history, causing an estimated $20 billion in property damage.

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Laura Adams is a personal finance expert and award-winning author who is Senior Insurance Analyst for InsuranceQuotes.com. She represents Bankrate Insurance’s web properties in the media and works as an advocate to make sure consumers protect their financial futures by having the right kinds of insurance.

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