On Easter Sunday 2010 at 3:40 p.m., Southern California went for a roller coaster ride that lasted approximately 45 seconds. Measuring 7.2 on the Richter scale, the quake was bigger than the devastating Haiti quake earlier this year. Remarkably, only three lives were lost and, except for Calexico near the epicenter, damage was minimal, limited to broken windows, cracked water mains and a few shattered knick-knacks that fell from shelves. A series of as many as 100 aftershocks in the 3.0 – 5.0 range have continued to shake the region in the aftermath, but the collective response from Southern Californians, has been “Phew! We dodged a bullet.” Maybe. The more prudent response, however, would be to check your homeowners insurance policy to see if you have earthquake insurance. (Renters, check your renters insurance policy, too.)
Earthquakes and earthquake damage can and do happen anywhere, but most standard homeowners policies do not include earthquake insurance coverage. In most states, you can purchase earthquake insurance as a rider to your homeowners insurance policy from your insurance company. However, in shake-rattle-and-roll-prone California, earthquake insurance policies are more often sold through the California Earthquake Authority (CEA), the state-run insurance pool. (Note that some private insurers in California also sell earthquake insurance coverage.)
If you’re new to shopping for earthquake insurance quotes, you could be in for sticker shock. The premiums can be pricey and deductibles can run as high as 15% of your coverage amount. Basic earthquake policies may not cover the replacement cost for all your belongings, landscaping, pools or other structures part from your actual home. But weigh all that against tacking another huge repair debt onto your mortgage and you may decide not to tempt fate.
By the way, if you’re counting on FEMA to come to your rescue, you’re likely to be sorely disappointed. FEMA loans are limited to what you’re insurance didn’t cover (and you’re expected to pay them back). FEMA grants are typically reserved for people who don’t have insurance at all.
If you don’t have a nice fat stash of emergency funds to cover necessary major repairs, or if you have a lot of equity in your home, the Southern California Easter earthquake could be your wake-up call to start shopping for earthquake insurance quotes.