Why are earthquake deductibles so high?

Earthquake deductibles are expressed as a percentage of the insured value, typically 5% to 25%, because earthquakes can cause widespread, correlated losses across many properties simultaneously. The high deductible keeps premiums manageable while still protecting against the most severe losses. For a building insured at $5 million with a 10% deductible, the owner would absorb the first $500,000 of damage.

Is earthquake insurance available everywhere?

Earthquake insurance is available in most areas, but it is most commonly purchased in states with higher seismic risk. In some high-risk areas, coverage may be available through state-sponsored programs. Availability and pricing vary significantly based on the local seismic risk profile.

Does earthquake insurance cover fire caused by an earthquake?

Fire following an earthquake is typically covered under your standard commercial property policy, not your earthquake policy. This is an important distinction. The earthquake policy covers the shaking damage, while the property policy covers any resulting fire. Confirm this with your insurance professional.

Should I consider earthquake insurance if I am not in California?

Yes, if your property is in or near a seismic zone. Significant earthquake risk exists in the Pacific Northwest, the New Madrid zone covering parts of Missouri, Tennessee, Arkansas, and surrounding states, the Wasatch Front in Utah, and parts of South Carolina. An assessment of your specific location's seismic risk can help determine whether coverage is appropriate.

Earthquake Insurance

Standard property insurance does not cover earthquake damage. Protect your apartment building from seismic events with dedicated earthquake coverage.

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What It Covers

Earthquake insurance covers physical damage to your apartment building caused by earth movement, including earthquakes, aftershocks, landslides triggered by seismic activity, volcanic eruption, and related ground movement. The coverage pays for structural repairs, foundation work, and rebuilding costs when seismic activity damages the building.

Most policies cover the building structure, permanently attached fixtures, and building systems such as plumbing and electrical that are damaged by ground movement. Some policies also cover additional living expenses or loss of rents when earthquake damage makes units uninhabitable. Contents coverage for landlord-owned items in common areas may also be available.

Earthquake policies typically have high deductibles relative to the insured value, often ranging from 5% to 25% of the building's coverage limit. This means the property owner absorbs a significant amount of damage before the insurance begins to pay. Despite the high deductibles, the coverage is valuable because earthquake damage can be catastrophic, potentially rendering an entire building uninhabitable or requiring complete demolition and reconstruction.

Why Apartment Owners Need It

Earthquake damage is universally excluded from standard commercial property insurance policies. Without a separate earthquake policy, an apartment owner receives no insurance proceeds for seismic damage, regardless of severity. A moderate earthquake can crack foundations, shift walls, break utility connections, and make a building structurally unsafe.

While earthquake risk is most commonly associated with California and the Pacific Northwest, significant seismic zones exist throughout the United States. The New Madrid Seismic Zone affects several Midwestern and Southern states, and the Wasatch Fault threatens Utah. Apartment owners in these areas face meaningful earthquake exposure that standard property coverage ignores.

The financial impact of a major earthquake on an uninsured apartment building can be devastating. Repair costs can easily reach 50% to 100% of the building's value, and the loss of rental income during a lengthy reconstruction can compound the financial damage. Earthquake insurance provides a financial recovery path that would otherwise not exist.