Insuring Your Home, Business Against Earthquake Damage

Earthquake insurance

Earthquakes occur more often and over a larger geographic span than many people realize. Each year, the United States has about 20,000 earthquakes, most of which are too small to be felt, but residents of 42 states have a reasonable chance of sustaining damage from a quake, according to the U.S. Geological Survey. Most homeowner and commercial property insurance policies do not cover earthquake damage, so earthquake insurance must be purchased separately.

Where Earthquakes Occur

According to a 2014 U.S. Geological Survey report, the 16 states at highest risk of quakes were Alaska, Arkansas, California, Hawaii, Idaho, Illinois, Kentucky, Missouri, Montana, Nevada, Oregon, South Carolina, Tennessee, Utah, Washington, and Wyoming. Traditionally, the top five states for earthquakes have been Alaska, California, Nevada, Hawaii and Washington, with eight of the 10 costliest quakes in U.S. history occurring in California.

In recent years, however, the country has experienced a sharp spike in seismic activity in Oklahoma, Texas and certain other states. Scientists link this to the disposal of wastewater created as a byproduct of oil and gas production; the wastewater is injected into wells specifically designed for this purpose.

Protecting Against Earthquake Damage

Earthquakes can cause significant damage to property, recovery from which can take months to years, depending on the severity of the damage. In general, older buildings not constructed to withstand earthquakes will suffer more damage.

Most homeowner or commercial property insurance policies do not include earthquake coverage, which must be purchased either as an endorsement or as a separate policy. However, homeowner and commercial property policies in most states cover damage from fire or burst water and gas pipes that result from an earthquake. Cars and other vehicles are typically covered for earthquake damage under comprehensive auto insurance policies.

Earthquake Policies

Earthquake insurance typically covers damage to a structure and personal belongings impacted by an earthquake and its aftermath. These policies also cover additional living expenses should you be unable to remain in the damaged structure. Common exclusions in earthquake policies include pools, fences, collectible items and external water damage, among others.

Deductibles of 10 to 20 percent are common in earthquake policies, especially in states with higher than average risk of earthquakes. If your deductible is 20 percent and you have a $100,000 claim, for example, you would be responsible for the first $20,000, while the insurer would cover the other $80,000. Premiums vary widely by insurance company, age and construction type of the structure, and especially the location. According to the Insurance Information Institute, insuring a brick home would cost about $3 to $15 per $1,000 worth of coverage in the Pacific Northwest, compared with 60 to 90 cents per $1,000 in New York, where earthquake risks are considerably lower.

California Earthquake Authority

The California Earthquake Authority (CEA) provides two-thirds of the residential earthquake insurance policies sold in California, with more than 1 million active policies. The CEA was established by the California Legislature in 1996 to provide residential earthquake insurance to state residents after many insurers pulled out of the market in the wake of the 1994 Northridge quake, which pummeled the San Fernando Valley and caused $20 billion in residential damage alone. The largest provider of residential earthquake insurance in the U.S., the CEA has more than $19 billion available to pay claims from seismic events. All CEA residential policies allow customers to choose deductibles in 5 percent increments from 5 percent to 25 percent.


When making an earthquake insurance claim, you need to carefully document all the damage with photographs and include an inventory of all items destroyed. Preparing a household inventory in advance is very helpful in the event that you suffer catastrophic earthquake damage.

Once the claim is made, the insurance company will send a claims adjuster to inspect your property and prepare an initial assessment of the damage. In many cases, disputes arise as to the value of the damage, and many policyowners will need to hire a public adjuster or licensed structural contractor/engineer to prove the proper value of the loss.

Don’t expect your insurance company to play fair with your claim. Insurance companies routinely contest multiple aspects of earthquake claims in an attempt to limit their liability. In 2021, Farmers Insurance agreed to pay $25 million to settle allegations that it improperly denied or underpaid about a thousand earthquake claims in Oklahoma. As per the terms of the settlement, Farmers agreed to reopen the claims process and re-evaluate the claims using an independent administrator.

If you have suffered losses from an earthquake and you need assistance with making or contesting an earthquake damage claim, do not hesitate to contact us for assistance. We have the experience and tenacity to make sure insurance companies keep their promises to policyholders like you.


Contact us today for a free consultation.



Evan S. Schwartz
Founder of Schwartz, Conroy & Hack