Your homeowners policy will not cover damage to your home and belongings in the event of an earthquake. To be insured for earthquake losses, you’ll have to separately purchase an earthquake coverage endorsement—and in the Bay Area, this is expensive.

California law requires insurance companies to offer earthquake coverage whenever a consumer purchases a homeowners policy. Some companies offer coverage themselves; others offer it through the California Earthquake Authority (CEA), a privately financed, publicly managed agency that sells earthquake insurance through participating insurance companies.

To control costs, many homeowners buy policies with deductibles of 10 or 15 percent (with a 15 percent deductible, you’d pay $90,000 on the loss of a $600,000 home). Coverage limits for earthquake policies are also lower than for standard home policies; for example, most policies homeowners buy allow them to collect only up to $50,000 for personal property losses and only up to $25,000 for increased living expenses while a damaged home is being repaired. Renters and condo owners can face similar low limits for personal property and increased living expenses.

Insurance companies and the CEA now offer more coverage options and higher limits than they did a decade or so ago: You can now buy a policy with a deductible lower than 10 or 15 percent, and you can add higher limits for personal property. But making these types of improvements to most earthquake policies makes premiums even more unaffordable. And if you own a masonry home, earthquake coverage costs will be much higher—as much as three times higher than for a frame home.

Use the California Department of Insurance's excellent rate comparison tool to collect pricing for earthquake coverage for your home. The CEA also has a price-quoting tool for earthquake coverage offered by companies that participate with it.

Because earthquake coverage is so expensive, consider cost carefully when choosing a homeowners insurance company. As you can see from the costs reported by the CEA and the state insurance department, the company with the best rates on a basic homeowners policy may not be the lowest when you add the price for earthquake coverage.

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