Most people don't talk much about earthquakes, even in regions with plenty of seismic history. First-time home buyers often overlook the fact that earthquakes aren't covered in standard homeowners insurance plans. Here's a look at why all California homeowners need a disaster plan that includes earthquake insurance.

What Earthquake Insurance Covers?

• Dwelling - The foundation, the entire structure of your home, and any structures attached to it, including flooring, are covered in an earthquake policy.
• Other Structures - This additional coverage applies to structures that aren't connected with the dwelling, such as a garage or a storage unit.
• Personal Property - Every personal item you can imagine, from musical instruments to furniture to jewelry, can be covered up to certain limits. Some policies have special $500 limits on computers.
• Loss of Use Expenses - This coverage pays for living expenses such as lodging and meals when you are unable to live in your home while it's undergoing repairs.

What's Not Covered by Earthquake Insurance?

• Water Supply Systems - Wells, irrigation systems, and sprinkler systems require additional coverage.
• Underground Structures - Pipes and cables, along with drains and other underground equipment, are not protected by earthquake coverage.
• Walls and Fences - Any exterior masonry will need separate coverage.
• Satellite Dishes and Antennas - Earthquake coverage doesn't include telecom equipment, which might be protected by the warranty.
• Outside Personal Property - Any personal belongings stored outside the dwelling will not be protected by earthquake coverage.
• Certain Vehicles - Trailers, aircraft, and watercraft all require separate coverage.
• Business Property - Any business property used by the owners or rented to others needs its own commercial business insurance.
• Rented or Occupied Property - Belongings of renters must be covered by the tenants themselves.
• Landscaping - Trees and plants require separate coverage.

There are many other scenarios that may seem as though they should be covered by an earthquake policy but aren't. Disasters triggered by earthquakes such as explosions, radiation, falling objects, and water damage are likely not included in your coverage but can be added for a higher monthly premium. Theft, burglary, or looting are not covered in an earthquake policy, so it's best to speak with your insurance agent to find out exactly where your protection stands.

Each insurance agency designs its own policies based on risk assessment factors. Costs vary among companies, but you can often get the best deals while purchasing multiple policies from the same agent.

Factors Affecting Earthquake Insurance Costs

• Where the Home Is Located - If the home is in an area with a history of earthquakes, the coverage will likely cost more than in a state with minimal seismic activity. California homeowners typically pay $800 per year for earthquake coverage, whereas costs in low-risk states range from $100-$300 per year.
• Age of the Home - The older the home, the more vulnerable it is to seismic activity, so the more the insurance will cost.
• Rebuilding Cost - This cost is based on replacement materials similar to your original home. It's hard to estimate since the material costs fluctuate over time based on supply and demand.
• Your Deductible - Whatever you decide to pay out-of-pocket, especially your deductible, can be adjusted at any point. The less you pay for your monthly premium, the more you'll pay out-of-pocket when an earthquake occurs. Earthquake policies often have high deductibles, such as up to 25 percent of a claim.

Earthquake Insurance for Californians

The reason all California homeowners and renters need earthquake insurance coverage is that the state has been ranked number one by the United States Geological Survey for "strongest shaking potential." Earthquakes are always a concern due to their unpredictability. The nation is full of fault lines where tremors are possible.

When you sign up for earthquake coverage, be aware of policy limits. The policy, for example, might only cover damage up to $100,000. Whatever the limit is, you pay the rest after that. Your insurance agent can raise your limits, but you will pay a higher monthly premium.

In California, insurance companies have a legal obligation to offer earthquake coverage when people purchase a homeowners policy. This offer must be made in writing and must include policy limits and the amounts of deductible and monthly premium. Once the homeowner receives the offer, they have 30 days to accept. The homeowner is under no obligation to buy earthquake coverage.

About 65 percent of the earthquake coverage available for California residents comes from the California Earthquake Authority (CEA). Although homeowners cannot buy directly from this organization, they can buy from member insurance agencies. Homeowners or renters insurance is required in the state to cover damage from fire that results after an earthquake.

While many times seismic activity causes minimal damage, it's hard to determine when a "big one" might hit. Even a minor quake can disrupt business or lead to computer repairs. It's best to take inventory of all your valuable items and share the information with your insurance agent to make sure everything is covered in the event of a natural disaster. Earthquake coverage usually requires adding to your existing policy. Find out from your agent if you qualify for any discounts if you bundle all your coverage.

 Several regions across America are prone to earthquakes, where homeowners and renters should consider buying earthquake insurance. Most serious quakes happen unexpectedly and can cause excessive financial disruption. Having the right insurance coverage in place is the best way to protect against the financial setbacks that can occur from natural disasters. Preparing for an earthquake is a part of smart risk management. Contact Jack Stone Insurance Agency to learn more about protecting the value of your assets from earthquake damage as part of your disaster plan. Our team of experts is here to assist you with all your coverage needs.