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How Much Is Earthquake Insurance and Do I Need It?

Talking about insurance isn’t all that exciting, we get it. But do you know what’s less exciting? A fat stack of bills after an unexpected emergency—like an earthquake!

Depending on the size of the quake, damage can range from a small crack in the wall to an unplanned home demolition. That means a strong earthquake could demolish your bank account. And even though earthquakes can be just as catastrophic as a tornado or a fire, they’re not covered by standard homeowner’s insurance

If you think you can skip out on earthquake insurance because you don’t live in California, think again. According to the U.S. Geological Survey (USGS), more than 143 million Americans across the continental U.S. are at risk of the ground shaking underneath their feet.1 Yikes.

So, should you rush out right now and purchase earthquake insurance? Not yet. Let’s talk about how much earthquake insurance is, what exactly it covers, and if it makes sense for you.

How Much Is Earthquake Insurance?

We’ll give it to you straight—if you live somewhere that’s likely to get shaky, earthquake insurance is probably not going to be cheap! The higher the risk of earthquakes in your neighborhood, the higher you’ll pay out of pocket.

Protect your home and your budget with the right coverage!

For instance, premiums from California insurance companies range from $800–5,000 a year, with deductibles typically 15% of total home value.2 Let’s put that into dollars: A 15% deductible on a $400,000 home is $60,000. And if you’re a homeowner in Los Angeles where the average selling price is $700,000, it’s a whopping $105,000!

Unfortunately, Los Angeles does get a lot of earthquakes, so it’s best not to stick your head in the shaking sand if you live there. California is so earthquake-prone that the state actually requires homeowner’s insurance companies to offer earthquake coverage to their clients, though it’s not required that they buy it. It’s worth repeating, standard homeowner’s insurance policies won’t pay for any damage related to “movement of earth”—a fancy term that includes earthquakes. So, for Californians, it’s best not to skip out on earthquake insurance.

So, how much is earthquake insurance going to cost at your house? Like with most insurance coverage, the number varies based on several factors, including your home’s:

  • Location
  • Size
  • Cost
  • Age

Different coverage options are also available depending on your wants and needs.

No matter where you live, deductibles for earthquake insurance plans are still higher than those in standard homeowner’s or renter’s insurance. It’s typically 5–15% of the policy limit, according to the Insurance Information Institute.3 

If insurance talk is confusing to you (and you’re not alone), we have an easy-to-understand guide to all things insurance. But just remember this: the higher the deductible, the lower the premium.

What Does Earthquake Insurance Cover?

If a huge earthquake struck and you met your deductible, your insurance policy would pay for:

  • Dwelling coverage: repairs to your home and extended structures, like a garage or pool
  • Personal property coverage: reimbursement for your belongings, including clothes and furniture
  • Loss of use coverage: additional living expenses you may need, like hotel bills and dining costs, if your home is unlivable

There is a predetermined limit on what earthquake insurance pays, so while the coverage will help put a roof back over your head, it probably won’t be enough to restore your entire home (and belongings) to former glory.

It’s worth noting that earthquake insurance wouldn’t cover a flood caused by an earthquake—you’ll need separate flood insurance for that. And while we’re on the subject of natural disasters, you’d likely need to purchase a separate policy for flooding and sinkholes even if these disasters were the result of an earthquake. But if the quake caused a fire, that would be covered under your homeowner’s insurance. Auto insurance would likely cover any damage caused to your vehicle.

Do I Need Earthquake Insurance?

To put it simply, if you live in an area where earthquakes tend to shake things up, you need to get earthquake insurance. 

The purpose of any kind of insurance is to transfer the risk you can’t handle by yourself. When you get earthquake insurance, you’re transferring the risk of bankruptcy off your family and over to the insurance company. So, unless you have a massive amount of money in your emergency fund that can cover the damage, get earthquake insurance!

On the other hand, if you live somewhere like Minnesota where there’s a slim-to-none chance of an earthquake, you probably can find a better use for that $800–5,000 a year. Don’t throw your money away on insurance for risks that have virtually no probability of happening. 

There are eight main types of insurance we believe are nonnegotiable, and earthquake coverage isn’t one of them. It’s only a smart move if there’s a high risk! If you’re not sure about the probability of earthquakes in your neighborhood, these hazard maps from FEMA show the likelihood (and intensity) of earthquakes throughout the United States.

What if I’m Renting?

Renter’s insurance doesn’t cover damage caused by earthquakes, so again, if you live in a high-risk area, you’ll want to add earthquake insurance. It will ensure your belongings can be replaced and give you a roof over your head in the event you lose your home. But because you don’t own your home, your earthquake insurance wouldn’t cover any structural damages here—that falls on the landlord.

Of course, for any insurance question, you should ask a pro. Don’t risk bankruptcy over an insurance mistake. If you don’t have an insurance agent you can trust, talk with one of our Endorsed Local Providers (ELPs). Our ELPs are independent insurance professionals who will recommend the same coverage Dave does (and help you save loads of money). Find an insurance ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Do You Have the Right Coverage? 

Do You Have the Right Coverage? 

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Do You Have the Right Coverage?  

Find out with our free 5-Minute Coverage Checkup!
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