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A crack in a cement wall resulting from earthquake damage

Earthquake Insurance Coverage Explained

Not everyone needs earthquake insurance – but even if you're not living on the San Andreas Fault, you may want to consider it.

If you’re in a location that experiences regular earthquakes, you probably already have coverage in place and understand exactly what it is and why it’s important. But if you live in a location that isn’t as seismically active, you may wonder if it’s coverage you need.

Are You At Risk?

Your state may not have regular earthquakes, but sometimes tremors can travel to neighboring states and cause damage hundreds of miles away. For example, a couple of years ago an earthquake in Southern Illinois sent tremors to Iowa and cracked a house foundation in Iowa – a state not exactly known for earthquakes. The homeowner’s earthquake insurance helped repair the damage.

Brick and wood buildings with crawl spaces, and older multi-storied structure, may be in more danger of experiencing damage in an earthquake. A contractor or engineer can help you assess your property’s risk for earthquake damage.

Types of Coverage

Depending on where you live, earthquake insurance can be an individual policy or an endorsement to an existing business (or homeowner’s) policy. Typically, if you live in one of the areas where there are active faults, like California or Alaska, you will need a policy. If you live in the Midwest or south, you can often purchase an add-on endorsement.

What Earthquake Insurance Covers – and Doesn’t

What Earthquake Insurance Covers

What, exactly, does earthquake insurance cover?

  • It covers damage to your building or premises.
  • If the foundation cracks, the walls collapse, or the floor falls, you’re covered.
  • Equally important, if you suffer damage, earthquake insurance can cover the cost of moving to a temporary alternative location while your property is repaired, as well as the cost of the repairs, and other related expenses.
  • It can help cover the costs of bringing your building up to code, or stabilizing the structure after a seismic event.
  • It will also cover the cost to move debris, if needed.

What Earthquake Insurance Does Not Cover

You should also know what an earthquake policy does not cover.

  • If shaking ground causes a fire or broken pipes that result in flooding, those are covered by homeowner or business insurance, not earthquake insurance.
  • Explosions and movement of soil – sinkholes, for example – are excluded.
  • If your vehicle is damaged in an earthquake, it would be covered by your auto insurance.
  • Your property – furniture, technology, décor items – within the premises would be covered by your business or homeowners insurance.

Some business owners in lower-risk areas choose sprinklers-only coverage, which is less expensive than whole coverage. The good news? Earthquake insurance is typically very affordable and well-worth the small annual cost to protect your property.

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