Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake loss.

Most earthquake insurance policies feature a high deductible, which makes this type of insurance useful if the entire home is destroyed, but not useful if the home is merely damaged. Rates depend on location and the probability of an earthquake.

Ideally, your earthquake insurance policy should cover the cost to replace or repair your damaged property. The following questions could help you decide whether earthquake insurance is right for you and how much coverage you should have:

Can you afford to replace your household possessions (such as sofas, TVs, furniture, clothing, etc) if they were destroyed in an earthquake? How much would they cost?

If you have to find temporary accommodations because you cannot live in your home after an earthquake, how much will you need to pay for those additional living expenses?

What would it cost to rebuild your home? Do you have assets to repair or rebuild your home after an earthquake?

Do you have a mortgage on your home? Can you afford to continue paying your loans while your home is being rebuilt?

These are some of the questions you should ask when considering purchasing earthquake insurance.


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