If you felt the earth move Thursday, chances are you didn’t have earthquake insurance.
Thursday’s 6.4 magnitude earthquake was the strongest to hit Southern California in 20 years and shook homes and buildings for hundreds of miles.
With the Independence Day quake, the recent spate of tornadoes and with hurricane and wildfire season upon us, you might be wondering how well would your homeowners or renter’s insurance will hold up in a natural disaster.
The answer largely depends on the disaster. Damage from many calamities are covered by a standard policy, but a handful are not and require separate coverage for protection.
For earthquakes, you must buy a separate policy from a private insurer or, if you live in California, from the state’s California Earthquake Authority.
According to a July 2018 study by the California Department of Insurance, about 13% of California residents purchased earthquake coverage in 2017.
Strongest quake in 20 years: 6.4 magnitude quake rattles Southern California on July 4th holiday
Tornadoes, hurricanes and earthquakes: What does home insurance cover after a disaster?
Even if your insurance covers the peril, it may not be enough. Many homeowners and renters don’t have adequate protection to cover all their losses. And, because of the new tax reform law, uninsured losses can only be deducted in specific cases.
Here’s what you need to know about your insurance covering your house or apartment.
What damage does insurance cover?
Homeowners, condo and renter’s insurance cover damage sustained from most perils, including tornado, hurricanes, severe storms, rain, wind and fires. Homeowners insurance will pay to repair the structure of the property up to the insured amount and other detached structures like a garage or garden shed – typically around 10% of the main structure’s insured amount.
It also covers possessions inside the home – typically up to 50% to 70% of what the structure of your home is insured for. Landscaping elements such as trees and shrubs are generally reimbursed at about $500 per item, says Loretta Worters, a vice president at the Insurance Information Institute.
Condo insurance covers possessions and some structural elements, such as drywall in the unit. The condo association’s insurance should cover damage to the building. Renter’s insurance only covers your possessions – often excluding appliances – but your landlord should have a policy that covers the structural elements of the apartment.
What damage is not covered?
Damage from flooding and earth movement – which includes earthquakes, mudslides, landslides and sinkholes – is excluded from homeowners, condo and renter’s insurance.
According to the California Department of Insurance, if you have homeowner’s insurance in the state your company must offer to sell you earthquake insurance too.
Some policies may also exclude specific weather in certain areas where it’s common – such as windstorms for coastal states.
Homeowners, condo or renter’s policy will reimburse you for any additional living expenses you incur because you can’t live in your damaged home: costs like hotels, restaurant meals and laundromat expenses.
“These are for costs that exceed your typical costs,” Worters says. “You can’t have an exorbitant restaurant bill. It comes with limits.”
Any theft or damage done to your home by looters or vandals after a disaster is also covered by your homeowners, condo or renter’s policy.
What about your car?
If your auto insurance policy includes comprehensive coverage – which is not required by law – then your insurer will pay for costs to repair damage to your car from any peril, such as major weather events or simply a fallen branch.
Unlike homeowner’s insurance, your auto policy typically covers flood and earth movement.
Your auto insurance often will cover rental car fees while your car is repaired or replaced. In some cases, it’s not automatically included, so you have to purchase this coverage at an extra cost.
Your insurer can only cover what it knows you lost. That’s why it’s important to keep accurate records for filing claims in the future.
- Make sure your insurance policy accurately describes your home – including square footage, number of rooms, age and materials it’s constructed from. It should also account for any recent improvements – like a new roof or water heater – and upgrades – such as a room addition or new pool.
- It’s also important to have an inventory of your possessions. It can be hard to remember what you owned in the emotional aftermath of a disaster, especially if you and your family are dealing with injuries or worse.
- An easy way to take inventory ahead of time is to go through each room and closet and record every possession on your smartphone’s video. When possible, note the make and model of items, especially higher-end appliances.
- Rare or expensive items such as art, collectibles or jewelry require additional coverage apart from your homeowners, condo or renter’s insurance, and must get appraised first before getting a separate policy.
- Store your inventory record and insurer’s contact info somewhere besides your house or digitally where you can retrieve it at any time.
California earthquake insurance
Here are some things to know about earthquake insurance from the California Department of Insurance:
- There are limits on what earthquake insurance pays. The purpose of earthquake insurance is to help put a roof back over your head. It does not replace everything you lost.
- To estimate your earthquake insurance premium, use the Premium Calculator at www.earthquakeauthority.com.
- To find out if you live where earthquakes are common, including nearby fault lines, search on the U.S. Geological Survey website at https://earthquake.usgs.gov.
- A house is likely to have more damage if it is older, or built of brick or masonry, or has more than one story.
- If you can’t afford earthquake insurance, the state says there are ways to protect your home and reduce damage caused by earthquakes. It suggests retrofitting houses, securing breakable items with museum putting, bolting furniture, tying down computers and televisions.