If you’re thinking about purchasing a renters insurance policy, you might be wondering, “does renters insurance cover earthquakes?” It’s a good question to ask yourself, especially if you live in a state that experiences earthquakes. The short answer is no, earthquake damage is not a covered peril under most renters insurance policies.
Although renters insurance doesn’t cover earthquakes, there are other types of insurance that do. Renters can purchase a separate earthquake insurance policy to fill the gap in coverage. Earthquake insurance for renters is available from most major insurance providers, but adding this policy will increase your premium.
[ Read: Earthquake Insurance – Is It Worth It? ]
Do I need a separate policy to cover earthquake damage?
Yes, if you rent your home or apartment, you’ll need to purchase earthquake coverage separately. Some insurance companies sell standalone earthquake insurance policies, while others sell earthquake endorsements, which get added to your basic renters policy.
Earthquake damage is almost never covered by renters insurance, or home insurance for that matter. The most notable exception is USAA, which includes earthquake insurance in its renters insurance policies. But for the majority of providers, renters are required to buy separate coverage.
[ Read: How Much Renters Insurance Do I Need? ]
If you don’t want to buy traditional earthquake coverage through your renters insurance provider, you might be able to get a policy through your state. For example, California residents can purchase coverage through The California Earthquake Authority (CEA).
How do earthquake endorsements work and what do they cover?
If you live in an area that experiences earthquakes or you live near a fault line, it’s a good idea to consider buying an earthquake endorsement. Earthquake insurance for renters covers losses stemming from earthquakes. As a renter, earthquake insurance will cover your personal belongings that get damaged or destroyed due to seismic activity.
Say, for example, a major earthquake strikes your area and it knocks over your refrigerator, which leaves a big crack in the floorboard. In this case, your earthquake insurance policy would pay for the floor repairs and the cost of a new refrigerator, plus any structural issues caused by the falling object.
However, earthquake insurance usually doesn’t cover anything that your renters insurance policy already covers. Here’s an example. Imagine that you were cooking on the stove when an earthquake hit, and in the frenzy of the moment, you accidentally started a small fire. In this case, your renters insurance policy would cover the fire damage, not your earthquake policy.
[ Read: What Is Personal Property Insurance? ]
In addition to property damage coverage, earthquake insurance also includes loss of use coverage. This policy, also called additional living expenses, will pay for hotel bills, meals, parking and laundry if your home gets damaged and you’re forced to temporarily move out.
Can I combine renters and earthquake insurance claims?
Having earthquake insurance is important for certain renters. But the reality is, there is overlap between renters insurance and earthquake insurance. If you add an earthquake endorsement to your renters insurance policy, you will double up on personal property coverage and additional living expenses coverage.
Typically, you can file a single claim if the earthquake causes multiple losses. For example, if an earthquake affects your home’s electrical system and it starts a small fire, you would be allowed to file one claim because the losses are related. Depending on the terms of your insurance policy, you might only have to pay one deductible.
If your earthquake and renters insurance policies are underwritten by two different providers, it’s likely that you will need to file two separate claims. It’s a good idea to check with your insurance company to understand the protocol for filing earthquake claims and to understand how your renters and earthquake coverage differ.
How much does earthquake insurance cost?
The cost of earthquake insurance varies. It depends on where you live, how much coverage you have, your deductible and the provider you choose. According to CEA, earthquake coverage for California renters can cost as little as $35 per year. However, renters who are located in close proximity to fault lines should expect to pay the highest rates.
The good news is, earthquake insurance for renters is much cheaper than it is for homeowners. Because renters don’t own the building they live in, renters earthquake insurance does not include dwelling coverage, which makes up a big portion of the cost.
That being said, earthquake insurance for renters does have a required deductible. The deductible is usually calculated as a percentage of the policy’s personal property coverage limit. According to the Insurance Information Institute (III), most renters earthquake insurance policies include up to $200,000 in personal property coverage. So if the deductible was 8% on $150,000, for example, your deductible would be $12,000.
When should I get a stand-alone earthquake insurance policy?
Most earthquakes cause very little damage. But if a major earthquake strikes your area and you don’t have coverage, you’ll be on the hook financially for any damages. The best time to get a standalone earthquake insurance policy is right now. Earthquakes strike unexpectedly, and you shouldn’t wait for an earthquake to hit before buying a policy.
If your home or apartment does not meet local construction guidelines, having earthquake insurance is especially important. Homes that don’t meet building codes could face greater damage, especially if large items are not properly secured to walls and floors. Find out if your home or apartment meets local earthquake regulations, and if not, it’s a good idea to buy insurance.
Keep in mind that earthquake insurance will only cover your personal items and loss of use when you have an active policy at the time of the earthquake. So if an earthquake strikes and you purchase a policy the day after, the policy won’t retroactively cover the damage. If you think your home might be at risk, trust your intuition and invest in earthquake insurance.
Too long, didn’t read?
Most renters insurance policies exclude coverage for earthquake damage, so earthquake insurance is a smart investment for renters who live in areas with seismic activity. Earthquake insurance for renters includes personal property coverage and loss of use coverage, with coverage limits up to $200,000. Earthquake insurance can be expensive, especially if you live near or on a fault line.
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In response to the Covid-19 pandemic, many insurance companies provided relief in the form of percentages back on monthly bills as well as a freeze on coverage cancellations due to inability to pay. While it’s not recommended, you could technically stop your coverage to save money if absolutely needed — but again, it’s strongly advised against.
See below for more details on how you can benefit from the recently approved economic relief act:
Who can benefit from this?
To qualify for rental assistance under the CARES Act at least one household family member must qualify for unemployment or have a significant income lost due to the pandemic. Income must fall at or below 80% of your county’s average income. You must also be a risk of homelessness.
Who’s getting how much?
If families fall below 50% of the average income they’ll be given priority for rent relief funds. Families can get up to a year of rent covered, and three months in the future with the CARES Act rent relief assistance.
How to apply
If you need to apply for assistance, the way you do that will vary depending on where you live. If your city or town has an existing rental assistance program, you’ll likely use that to apply for new aid.
You can contact your local housing authority, nonprofit groups or reach out to your local representatives to find out where and how to apply. Your landlord may also be able to apply for you — but they’ll have to get your approval and signature before doing so.
Source: thesimpledollar.com