In August 2021, news footage of the devastation caused by the 7.2 earthquake that struck Haiti was certainly heartbreaking, but it was also a troubling reminder for property owners in the United States who could suffer the same fate one day.1 As recently as July 2019, residents of Los Angeles felt the strongest shaking to hit Southern California in 20 years, with magnitudes measuring 6.4 and 7.1. Fortunately, there was little damage reported.2

California has seen the most earthquake damage in recent history, but other states have also experienced major quakes. USGS research has concluded growing seismic activity in some states is most likely related to oil and gas production.3

Damage from earthquakes isn’t covered by standard homeowners, renters, and business insurance policies, though separate coverage is often available. Despite the potential risks, only about 23% of homeowners polled in the United States – and 13% of California homeowners – say they have earthquake coverage.4,5

Catastrophic coverage

Earthquake insurance helps provide financial protection from sudden earth movement that can destroy buildings and their contents. It also covers debris removal and may pay for some extra living expenses while the covered home is being repaired or rebuilt.

Generally, earthquake policies are designed to help protect homeowners from suffering a total loss on their property. As a result, most policies carry a deductible ranging from 2% to 20% of the structure’s replacement value. Policy rates and deductibles depend on the age and construction of the home and how likely it is for earthquakes to occur in the region, so higher-risk states often have higher minimum deductibles.

Supplemental policies are available through private insurers; in California they’re also available through a state-run program. A private-public partnership called the California Earthquake Authority (CEA) now offers homeowners an earthquake policy with a choice of deductible ranging from 5% to 25%. The coverage limit is typically the insured value of the home as stated on the accompanying homeowners policy. The CEA policy contains exclusions and special limits of coverage. Of course, the entire policy should be read for what is and isn’t covered.

Man-made threat

Waste-water disposal related to fracking has been blamed for inducing earthquakes in places where they were once uncommon. The USGS now publishes an earthquake hazard map, including both natural and human-induced quakes.

The areas at highest risk of man-made earthquakes are in Oklahoma, southern Kansas, north-central Texas, and north-central Arkansas, but other states have also been affected.6 Structures in these regions aren’t likely to have been built to meet seismic safety standards, making them especially vulnerable. Homeowners who live near oil and gas fields should look closely at earthquake endorsements to make sure they don’t exclude seismic events caused by human activities.

Early-warning systems are already operating in some countries, including Japan and Mexico, and scientists have recently rolled out one for California (see Even so, early detection can only provide a few seconds or minutes to prepare for the shaking.

Retrofitting an older home (strengthening the foundation with braces and bolts) often reduces the amount of damage caused by severe shaking and could also lower your insurance premiums.

You may want to discuss whether you have the appropriate supplemental insurance coverage with your agent, based on the location of your property and your specific financial needs.

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1USA Today, August 25, 2021. 2,4Insurance Information Institute, 2021. 3,6U.S. Geological Survey, 2021. 5NPR, July 9, 2019.

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2021 Broadridge Financial Solutions, Inc.