When Is Earthquake Insurance Needed?

Written by Will Caldwell

The ground shakes under Americans’ feet an average of 20,000 times every year. Most of the time, the seismic vibration is so slight that we don’t even feel it. 

But those rare major earthquakes — in addition to being hazardous to life and limb — are capable of causing catastrophic damage to your home and the property inside of it. Worst of all, much of that damage won’t be covered by standard insurance policies. 

Fortunately, there’s something out there called earthquake insurance. But is it worth it? What is earthquake insurance, and how do you know if you really need it?

What Is Earthquake Insurance?

Earthquake insurance is exactly that — insurance that covers homeowners in the event of an earthquake that damages their home. Personal property damage is usually included as well.

Does My Current Insurance Cover Earthquake Damage?

The short answer is no. If the structure of your home or your personal property is damaged due to an earthquake, most homeowners’ policies do not cover those damages.

There are exceptions. If an earthquake causes a pipe to burst resulting in water damage, homeowners’ insurance may cover it. Ditto if the earthquake causes a fire. If the earthquake causes floodwater to invade your home — a burst main pipe, a broken dam or reservoir, etc. — flood insurance could kick in.

But if the tremor itself is ruled to have caused damage to the foundation, structure, roof, or personal property, only earthquake insurance provides coverage.

What Does Earthquake Insurance Cover?

Earthquake insurance usually covers:

  • Dwelling Coverage. Damage to the foundation, walls, roof, and other key structural elements of the dwelling. 
  • Personal Property Coverage. Any personal property on the premises which might be damaged in the earthquake. 
  • Loss of Use Coverage. Expenses like hotel stays and/or loss of income due to the property being unusable.

How Much Are Earthquake Insurance Deductibles?

Deductibles tend to be 10-20% of the coverage limit. As you can probably tell, this is quite high. If your coverage limit is $300,000, a 10% deductible would be $30,000. That means the first $30,000 comes out of your pocket. If you face $300,000 worth of repairs or construction, though, that deductible could start to look pretty good.

How Much Does Earthquake Insurance Cost?

Earthquake insurance tends to be expensive, running anywhere from $800 to $5,000 a year, with higher premiums kicking in when your property is located in a zone of higher earthquake risk — i.e. close to a fault line or volcano, in states like California, Oregon, Washington, or Hawai’i.

Should I Buy Earthquake Insurance?

Given the cost of earthquake insurance — the high premiums and high deductibles — it’s fair to ask “Is it even worth it?” Even if you live in a high-risk zone, how big is the risk? Can you do without, or is it “better safe than sorry?”

Who is At Risk for Earthquake Damage?

90% of those 20,000 US earthquakes happen in California. Due to the position of the Pacific tectonic plate, other states at high risk include Oregon, Washington, and Hawai’i.

The closer you live to a fault line or volcano, the higher your risk. The US Geological Survey (USGS) publishes this map of color-coded earthquake risk zones if you want a broad idea of your earthquake risk. The exact position of nearby fault lines can be identified as well.

That being said, earthquakes can happen anywhere. Charleston, SC experienced a 7.3 seismic event in 1886, while Oklahoma has experienced increased seismic activity in recent years due to the injection of industrial wastewater into the ground.

When property gets sold, the seller may be required to furnish a Natural Hazard Report, which may include a professional analysis of the property’s susceptibility to earthquakes.

Weighing the Risks Vs. The Costs of Earthquake Insurance

As we will discuss below, your mortgage lender will probably not require you to buy earthquake insurance — even if a high earthquake risk is disclosed on a Natural Hazard Report, even if you live close to a fault line. Should you take that as a sign? Do you really  need to subject yourself to that extra expense?

There’s no easy answer to that. A vast majority of earthquakes cause little or no damage — again, they’re so slight as to barely be felt. Over time, those high premiums could add up to a bigger expense than the expense to repair any earthquake damage that might occur, especially when coverage doesn’t even kick in until repairs surpass a 10-20% deductible. 

Consumer behavior reflects this statistically minimal risk and high expense — in California, the most earthquake-prone state, only 10% of residents have earthquake insurance.  

But a “Big One” could leave an uncovered homeowner out in the cold. Can you tolerate that risk? Only you can answer that. If you have an expensive or hard-to-replace home, with lots of valuable or sentimental personal property, you might ultimately decide that it is worth it. 

Do Mortgage Lenders Ever Require You to Buy Earthquake Insurance?

Mortgage lenders always require you to purchase homeowner’s insurance. If you live in a high-risk flood zone, they will usually require you to purchase flood insurance. If you live in a zone of high risk for seismic activity, will your lender require you to purchase earthquake insurance?

Usually not. It is very rare for lenders to require earthquake insurance, even in high-risk territories like California. 

Why not? After all, if the house gets swallowed up by a fault, the lender loses their collateral. Mortgage lenders are notoriously risk-averse, so the fact that most of them don’t require earthquake insurance should tell you something — they consider it so unlikely that the risk is acceptable.

Of course, it’s acceptable to them because your mortgage is one in a portfolio of hundreds or even thousands of loans. One or two houses may be an acceptable loss to them … but is it an acceptable loss to you? Most homeowners only have one house. Just because the lender isn’t concerned doesn’t mean you shouldn’t be.


Earthquakes are one of the most devilish natural hazards that homeowners face. Why some properties are at higher risk than others, they are nearly impossible to predict. No homeowner wants to pay a high premium to insure against a disaster that will likely never happen. 

But when major earthquakes happen, they are significant disasters. With little guidance from mortgage lenders, it’s up to each homeowner to decide if the risk of catastrophic loss justifies the expense.

If you are curious about potential natural hazards for your current or new home, our comprehensive Natural Hazard Reports are a great option. At SnapNHD, we have some of the best pricing and leverage robust technology to deliver high quality natural hazard reports. Our premium report includes hazard disclosures, tax information, notices, and important maps.