We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Earthquake Insurance?

Mary McMahon
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Earthquake insurance is a form of homeowners' insurance which deals with damage caused by earthquakes. In regions where earthquakes are especially common, homeowners may be required to carry earthquake insurance, so that in the event of an earthquake, people rely less on government disaster funds and more on their own insurance policies. As a general rule, earthquake insurance is not a part of standard insurance policies, and it must be purchased separately.

Earthquakes can cause a variety of damage to a home, ranging from complete destruction to damage which causes the building to become structurally unsound. Indirect damage caused by neighboring collapses of structures and freeways can also occur, as can more bizarre forms of earthquake damage, like winding up with a car in the living room or a sinkhole in the back yard. Fires and flooding are also common problems in the wake of earthquakes.

When homeowners purchase earthquake insurance, they may be protected against both direct damage, such as a structural collapse after an earthquake, and indirect damage, like a fire caused by broken gas lines. More commonly, the insurance only covers structural damage caused directly by the earthquake. The insurance may pay for a complete replacement of the structure, or a remodel, depending on the type of insurance and the nature of the damage. Some policies also cover damaged property like cars, and they may provide living allowances so that the residents of the home can temporarily relocate for the duration of the repairs.

This type of homeowners' insurance is prone to adverse selection, in which only people in high risk areas purchase the insurance. The problem with adverse selection for insurance companies is that it decreases the pool of customers, making potential payouts very expensive. For this reason, earthquake insurance often has a high deductible, and it can be very expensive.

Recognizing the need for earthquake insurance, some governments have provided subsidies for earthquake insurance, to reduce the stress on insurance companies. Insurance companies also adjust their risk pools carefully, and there may be stringent requirements for a homeowner to purchase earthquake insurance. For example, a home may need to be retrofitted for earthquake safety, reducing the amount of damage which will be incurred in a quake. For low-income home owners, this can be very difficult, as it drives the cost of earthquake insurance out of reach, which can in turn make it difficult to get home loans, as many banks in earthquake-prone areas insist on earthquake insurance as a condition for a loan.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.