For a wide range of different reasons, one situation that you absolutely do not want to find yourself in is an earthquake.
Setting aside the fact that earthquakes are inherently dangerous, the level of damage that one can do to your home and other personal property can be costly and even catastrophic in some situations. This has led many people to wonder to themselves whether they need to invest in a specific earthquake insurance policy to get additional protection from the financial side of things.
But is earthquake insurance right for you? To answer that question, you need to know more about how it works and which situation calls for this type of coverage.
As the name implies, earthquake insurance is a specific type of policy designed to protect your home in the event that it is damaged in an earthquake. Note that this policy will operate entirely separately from any pre-existing homeowner's or renter's insurance policy that you may have.
While all earthquake insurance policies will vary depending on the provider, they typically all cover the same basic elements. These include ones like:
This is money set aside that will help you pay to either repair or totally rebuild your home after an earthquake.
This will cover any additional structures on your property that are not considered to be a part of the main house. That can include things like detached garages, sheds, fences, and more.
Any personal property that was damaged as a direct result of the earthquake will be paid for under this section of the policy.
Again, some policies may offer additional types of coverage, but most include at the very least these basic elements.
With all of that in mind, it's important to ask again - "is earthquake insurance worth the investment?" As is true with most things in life, the answer is a resounding "it depends."
If you live in an area that historically never deals with earthquakes, it probably doesn't make much sense to purchase such a policy. You may feel totally comfortable going along without it because the odds are in your favor. If you're in an area that sees earthquakes on a regular basis, however, you will probably want to buy a policy even if those incidents are relatively small in nature.
According to the USGS, you should consider the following factors when deciding whether to purchase your own earthquake insurance policy:
If you carefully consider all of those elements (and have an expert help assess ones you may not be able to do yourself, like soil conditions), the choice of whether to invest in earthquake insurance should become relatively clear.
If you don't have earthquake insurance, and you suffer major, irreparable damage to your home as a result of one, you'll likely end up paying for those expenses out of pocket. Keep in mind that this type of natural disaster is probably not covered by your pre-existing homeowner's or renter's insurance policy.
Because of that, an earthquake insurance policy is at the very least worth considering if you A) don't have the funds already saved up to rebuild your home should the need arise, or B) can't repurchase your personal belongings. If you would have trouble finding and paying for temporary living expenses, this is also another reason why you would want an earthquake insurance policy.
But again - it may literally not make sense to have such a policy if you live nowhere near a fault line and your area has never experienced an earthquake. Always do your research before making the call one way or another - don't leave anything this important to chance or you will likely regret it in the long run.
No matter what, if you decide to purchase earthquake insurance or if you decide to forgo the investment and put that money to use elsewhere, always make the most informed decision that you can. A lot of the aforementioned information is publicly available if you don't already have it. You can look up the seismic history of your region online and things like building construction are also publicly available.