Better Ask Barry: ‘Should I buy earthquake insurance?’

Do the recent Southern California earthquakes have you thinking about earthquake insurance? There’s a lot to consider.

The typical California home is covered by a homeowner’s insurance policy, which helps pay for damage from fire, lighting, wind and hail. It does not cover damage from earthquakes. For that, you need to buy an extra policy.

“Yes, I think it’s the price of living in California,” said Jim Russo, a Salinas insurance agent. “If you own a home and you don’t have earthquake coverage, you simply don’t have coverage.”

According to the California Earthquake Authority, which sells earthquake policies through participating insurers, there are over 500 active faults in California and most of the state’s residents live within 30 miles of an active fault line. Still, only about 10 percent of the state’s homeowners have earthquake coverage.

Russo says earthquake policies help pay the cost of rebuilding, relocation and additional living expenses while your home is being repaired. Even then, there can be unexpected costs.

“A fireplace, for example,” he said. “You’re not just building a brick fireplace. You’re going to have to remove the brick that’s still standing and replace it. That almost doubles the cost of a simple thing like that.”

Premiums can also vary depending on where you live.

“Monterey has a little bit better rate than Salinas, because there’s more rock in the soil, where the ground in Salinas tends to liquefy,” said Russo.

Another thing to consider is the policy’s deductible – or how much you’ll spend out-of-pocket before the insurance starts paying.

“The deductible ranges from 10-25 percent, and that’s the amount you’re willing to absorb yourself,” said Russo. “If you have a mortgage on your house, you’re still going to have a mortage on your house, even if it’s destroyed by earthquake.”

Do the math and talk things over with your family before you make any decision.

The California Earthquake Authority offers this online tool to help you determine coverage and costs.

And if you have a question about how things work, use this link and I’ll see what I can find out.