Your Homeowners Insurance Does NOT Cover an Earthquake

This week's earthquake centered near Mineral, Virginia caught New Englanders by surprise as its shock wave rumbled through the area. Although we tend to think of earthquakes as a west coast phenomenon, today’s tremor reminded easterners that we get them sometimes too. How much does a standard homeowner’s policy cover in the event of an earthquake?

Earthquake Coverage

This is a very easy question – nothing. Homeowner’s insurance policies specifically exclude any coverage for claims due to damage caused by movement of the earth, period.

Ah, you say, but we don’t get big earthquakes in the east. Historically, that is not the case; we just haven’t had one lately. While today’s Mineral earthquake was mild by California standards, in 1811-12 there were four earthquakes in the vicinity of New Madrid, Missouri that were probably magnitude 7. Besides causing the Mississippi to run backward for a period of time, their shock waves reportedly rang church bells in Boston and toppled chimneys in Maine. And New England has been hit by some powerful earthquakes in the last few centuries.

A surprise earthquake zone

Boston is actually considered to be at risk of considerable damage in the event of an earthquake, because of the area’s dense population and the fact that the New England region is considered overdue for a major earthquake. In 2006, the Boston Globe published a map showing that there are “landfill” areas in Boston, Cambridge, and nearby communities that would be at high risk of liquefaction during an earthquake.

So are you unavoidably stuck with paying for all the out-of-pocket costs in the event that your home is damaged by an earthquake? Happily, the answer is again “no.” It’s actually not very expensive to buy a rider to your existing coverage. In many cases, the cost will only be $100 – 200. I’ve had earthquake coverage for years, though I’m thankful I’ve never needed to make a claim.

I have noticed one thing, however. Recently my insurer raised the deductible specifically for claims made due to earth movement. Granted my insurer can’t predict earthquakes any better than I can, but the change suggests that the insurance company has become more concerned that a claim might take place in the future. I’m guessing there will be an uptick in sales of earthquake coverage in Virginia and Maryland this year.

About the author

Thomas Fisher, CFP®

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