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earthquake insurance: yes or no?

While there's little question that you should have homeowners insurance or renters insurance to protect your home in the event of a myriad of accidents and catastrophes, whether you need - or should take - earthquake insurance isn't quite as cut and dried.

This is because insuring your home against earthquakes is costly, even if you don't live near a fault line.

So why add another monthly payment for a natural disaster that may - or may not - happen? 

The best reason to obtain earthquake insurance is if you own your home (whether or not you have a mortgage), and are not in the financial position to pay in full for the damage to your home resulting from an earthquake.

Here are a few additional reasons to seriously consider earthquake coverage to help you avoid financial aftershocks.

Earthquake Insurance vs. Home Insurance

  • Earthquakes are not covered in your home policy or renter's insurance. This means if your home sustains earthquake damage, the initial damage, and any subsequent damage, such as flooding and foundational shifts that make your home unstable, will not be covered by your homeowner's insurance company.
  • What earthquake coverage includes. Earthquake insurance covers the damage to your home and its contents that are a direct result of an earthquake, including subsequent fires, flooding, or foundational damage.
  • The cost of insurance. Expect to pay more for insurance if you live near a fault line or in a high-risk quake area like California. But the age of your home and its value directly affects the cost of your monthly insurance premiums. 
  • Buy insurance before a quake strikes. If there's been a recent earthquake, most insurers won't sell any new earthquake insurance for 30 to 60 days. This is because, after a sizable earthquake, damaging aftershocks can occur in the days and weeks following the quake. If insurance is right for you, purchase before a major earthquake occurs.

How to Make the Most of Your Insurance Coverage

To make the most of your coverage, take video or multiple photographs at several angles of the higher-value items in your home.

Additional things you can do include:

  • Engrave big-ticket items such as flat-screen TVs and stereo systems with your name or other identifying marks to make them easier to locate.
  • Have expensive jewelry, antiques, stamp, or coin collections appraised.
  • Store your policy, appraisals, and photos or video in a secure location away from your home, such as your workplace, a safe deposit box, a friend's house, or online.
  • Pay your premium on time. Some insurers don't accept late payments. If they do, late payments may result in an increase in your premiums at renewal.
  • Plug your insurance agent's phone number in your cell phone. In the event of an earthquake, you'll be happy you did.

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