Many homeowners haven’t given much thought to earthquake insurance even though they could be financially devastated if an earthquake hits and they don’t have it. Most policies don’t cover damage caused by earthquakes. If one damages your home and you haven’t purchased the additional coverage, you’re still obligated to pay your mortgage, even if you can’t live there anymore and you have to pay for somewhere else to live.
A big obstacle is cost. Coverage is not cheap. It costs hundreds, even thousands of dollars per year depending on where your home is located and the materials used in construction. Many policies run $400 to $600 annually.
In the event of a quake, you must pay a fairly high deductible, typically 10 percent, before coverage kicks in. That means if you have $250,000 in coverage, you would pay a deductible of $25,000.
Another reason why so few purchase earthquake insurance is the uncertainty surrounding quakes and their frequency. Many people just think it’s such a remote possibility in their lifetimes that it’s not worth the cost. But at least consider the coverage and investigate the cost.