#1 “Earthquake insurance is provided by my homeowners’ policy.”
Homeowners in California erroneously assume earthquake coverage is provided in their homeowner’s insurance policy. Two thirds (2/3) of all the earthquake damage in the United Sates happens in California as it is the state with the most seismic activity, with an earthquake every 3 minutes. Yet, earthquake insurance must be purchased separately.
#2 “I don’t live in the Los Angeles or San Francisco areas, so my risk isn’t high.”
There are about 500 faults in California, meaning almost every home is near a fault. You can check the fault line nearest you by going to: https://maps.conservation.ca.gov/cgs/fam/
#3 “The government will provide assistance, so I don’t need Insurance”
Many owners think the Federal Government will step in to provide assistance after a disaster. To put it simply: the US Government will not step in to save the equity in your home. Funds distributed through the Federal Emergency Management Administration (loans or grants) are only for health and safety. After past earthquakes, FEMA has capped individual assistance at $5,000, however that figure has increased to $33,000 after recent flood and windstorm events. Even at this higher level, government assistance will help an owner find alternative housing or take proactive steps to stop further damage, but it won’t rebuild a lost home, and in most cases, must be paid back over time.
#4 “The government will help insulate me from my mortgage lender”
California is a “lender-friendly” state, with judicial foreclosures being very rare (judicial foreclosures offer more protections for delinquent borrowers). After an earthquake, this lender friendly environment means lenders can foreclose on a homeowner relatively quickly. If there is a dip in market value after an earthquake, for example, lenders can claim that there is a break in loan-to-value terms. Earthquake insurance represents critical collateral that can protect your equity from your mortgage lender.
THE TRUTH: Homeowners need to be proactive and protect themselves, and what is likely their most valuable asset, by exploring earthquake insurance. There are several excellent insurers that offer earthquake insurance that can be adapted to your coverage needs and budget. EQ Insurance Services can walk you through the process and offer you quotes from the top insurance companies that fit your needs.
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