Cost & Coverage
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Renters insurance has two main purposes: to protect you from liability when someone gets hurt in a home you rent and to reimburse you for property that gets destroyed or lost due to theft, vandalism, or certain hazards of ice. This article is about the latter provision, but with regard to earthquakes.
Your renters insurance policy will explain under which hazard conditions your damaged property may be eligible for a payout. But almost every renters insurance policy explicitly denies coverage for damage to your property caused by earthquakes. Similar to floods, another common natural hazard that is frequently excluded from renters insurance coverage, earthquakes may need to be covered under an entirely separate catastrophic insurance policy.
Earthquakes are excluded for standard renters (and homeowners) insurance coverage under a general provision for “earth movement” hazards, including landslides, sinkholes, and volcanic eruptions. Your renters insurance policy may, however, cover the indirect consequences of such a catastrophe, such as a fire.
If you decide to purchase earthquake insurance, be prepared to shell out a relatively large sum if you live in an earthquake-prone area, such as the Pacific Northwest.
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If you rent your home and have any personal property that you wouldn’t be able to afford to replace out of pocket, you should consider getting renters insurance. For one, it’s relatively inexpensive, capping off at around $15 to $30 per month for some policies, but it can save you thousands of dollars if you ever need to use it. That means the best time to purchase renters insurance is now.
But if you live in an earthquake-prone area, you may also consider getting earthquake insurance, because most standard renters insurance won’t cover damage caused directly by “earth movement.” Earthquake insurance for renters can be added in two ways: as a rider to your base renters insurance policy, or as a standalone earthquake insurance policy.
Despite improvements in sensor technology, earthquakes remain difficult to predict. Unlike other natural hazards, like hurricanes, for which you can sometimes plan weeks ahead, you won’t know you needed earthquake insurance until you’re staring down a pile of your grandmother’s smashed china that slid off your shelf in the last tremor. “The Big One,” a hypothesized earthquake of massive intensity that could occur along the San Andreas fault, is predicted to be so powerful that it would split California in two and send the ruins of Los Angeles into the sea. In 2016, a writer for The New Yorker won the Pulitzer Prize for an article describing the effects of a potential “big one” in the Pacific Northwest: devastating destruction, the loss of thousands of lives, and billions of dollars in damage.
Most earthquakes, though, if they register at all, will probably just destroy some of your belongings. But if you don’t have earthquake insurance, you could be on the hook for thousands of dollars. More importantly, your earthquake coverage could provide money to pay for alternative accommodations, or what’s called loss-of-use coverage, should your home become unlivable due to an earthquake.
Standard renters policies do not cover damage that occurred directly from an earthquake, but they may cover the related effects of one, such as fire, theft, or the breaking of glass.
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Earthquake insurance may be purchased from the same carrier as your renters insurance, but check with them first because smaller carriers may not offer it. While your standard renters insurance policy may have include exclusions for all types of earth movement – volcanic eruptions (with some exceptions), landslides, mudflow, sinkholes, and so on – you may need separate policies to cover each type. Earthquake insurance is just one of many types of catastrophe insurance related to the bulging and shifting of the earth.
You may decide to get a standalone policy for earthquake insurance, or you could get a rider for your renters insurance policy that adds coverage. This rider, called an endorsement, may add several types of coverage to your base policy, including volcanic eruption coverage as well as earthquake coverage.
Whether you choose the standalone earthquake insurance policy or the endorsement to your base renters insurance policy, be ready to pay a significant amount. Earthquake coverage isn’t cheap: your premiums may be as high as $800 to $3,000 per year, compared to just $150 to $300 per year for a standard renters insurance policy. The more coverage you need, the more you’ll pay, so make a home inventory of everything you’d need your coverage to replace after an earthquake.
Carriers may also distinguish between the type of home you live in. Normally, the building’s structure isn’t covered by your renters insurance policy, as it’s owned by the landlord and covered under his or her homeowners insurance policy. But because earthquake insurance will reimburse you for belongings destroyed as the direct result of an earthquake, the insurance company needs to know how likely it is that your home will collapse. For that reason, older homes are more expensive to cover, as are, perhaps surprisingly, brick buildings.
When you have earthquake insurance, it’ll cover any property damaged during a period of time from the beginning of the first earthquake to the end of the period some number of days later, to account for aftershocks and hidden damage. A typical provision puts this period at 168 hours, or seven days, so everything damaged from hour 1 to hour 168 by any earthquake during that time may eligible for reimbursement. The clock resets after that period.
Damage that occurred from an earthquake before you took out the earthquake insurance policy or endorsement will not be covered. Additionally, the terms of your policy or endorsement may explicitly exclude coverage for any damage that would’ve occurred in the absence of the earthquake.
Just as with your standard renters insurance policy, your earthquake insurance coverage could exclude other types of catastrophes, like landslides, erosion, floods, lava flow, mudslides, even if they were caused by the earthquake.
While earthquakes are covered by your earthquake insurance policy or endorsement, your coverage may be limited by a deductible. The deductible is the amount of money you have to pay first before the insurance carrier picks up the rest.
The deductible of your base policy will be written out, along with your premium and other relevant dollar amounts, on an attachment to the renters insurance policy called the policy declarations sheet. But a separate deductible may apply specifically to damage caused by the earthquake, usually as a percentage of the endorsement’s limits of liability. If you get earthquake insurance as a standalone policy, the deductible will be listed on that policy’s declarations sheet.
When you get your earthquake insurance coverage as an endorsement to a renters (or homeowners) insurance policy, the base policy provisions still apply. That means that if an earthquake occurs, you’ll get coverage for damage directly related to the tremors – a TV tipping over backward, liability caused by your bookshelf falling on top of a guest, your smashed dinnerware, and so on.
But certain consequences of the earthquake, such as fire or theft, are also covered by the base renters insurance policy, so you can make claims for that stuff, too. When you make a combined claim, the renters insurance company will use separate deductibles for earthquake claims and each of the claims covered by the base policy. The carrier will also use separate limits of liability for each when determining how much it’s obligated to pay out.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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