The decision to carry earthquake insurance is purely personal and, oftentimes, is not an easy choice. Earthquake insurance is generally not included in your homeowners insurance policy, so it should be purchased as a separate policy or as an endorsement to your homeowners policy.

While the western states are known for their earthquake activity, it is worth noting that, according to the U.S. Geological survey, the U.S. has about 20,000 earthquakes each year and 42 states are considered at risk. The National Association of Insurance Commissioners reported an increase in earthquake activity in recent years in parts of the central and eastern U.S. In addition to the increased frequency, the potential cost of earthquakes has grown due to more and more urban development.

Earthquake insurance can be very beneficial during your time of need. If an earthquake damages your home, your repairs or reconstruction costs (above your deductible) should be covered. Additionally, some policies provide you with additional monies to live elsewhere if your home becomes uninhabitable.

In high-risk states, such as California and Nevada, earthquake insurance can be more expensive than in low-risk states. Earthquake insurance also typically has a high deductible, which should be kept in mind during your decision-making process.

Of course, as with all insurance policies, earthquake insurance is purchased with the hopes that it will never be needed. In general, we recommend getting an earthquake insurance quote. After reviewing your quote and coverages with your agent, you can determine if earthquake insurance is appropriate for you.

A financial planner can work with you to develop a personal risk management plan.

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