A Renter Weighs the Pros and Cons of Earthquake Coverage

A Renter Weighs the Pros and Cons of Earthquake Coverage

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photo: The 1989 Loma Prieta earthquake, centered in the Santa Cruz Mountains, caused widespread damage in the San Francisco Bay Area. (courtesy of Wikipedia).

Living in California, one never knows when the next big shaker could hit. Although I live in a place where earthquakes are the norm, I rarely think about preparing for the next big one.

While homeowners might hear about earthquake insurance as a part of the home-buying process, especially if they live in a high-risk area, renters like me seldom get the chance to learn how they can protect themselves and their belongings in the event of an earthquake.

After attending a public education event last month by the Earthquake Authority held by KGO TV, I learned that I could buy earthquake insurance as an add-on to a typical renters insurance policy. In the process, I found renters insurance offers some surprising benefits.

According to the Earthquake Authority, California has two-thirds of the nation’s earthquake risk. Some 2,000 known faults crisscross the state, producing more than 37,000 quakes each year. If a renter or homeowner is not covered by an earthquake insurance policy, he or she is responsible for the entire cost of damages.

Farmers Insurance agent Emilia Liu told me most of her customers who buy earthquake insurance are homeowners, and renters are usually reluctant to purchase it. Liu says renters should consider buying a policy, though, because they wouldn’t be protected under the landlord’s home and earthquake insurance policies, which typically covers the building structure, but excludes a tenant’s personal belongings.

"Some renters live in an earthquake [danger] zone, but they don’t even know about [this],” Liu said.
Liu says that according to FEMA (Federal Emergency Management Agency), some locations in the San Francisco Bay Area, including San Francisco, Hayward and San Leandro, could experience intense shaking if an earthquake occurs. If a resident wants to get a detailed report of his or her building site’s hazard level, they can contact the California Earthquake Authority.

Renters who find out they live in a high-risk earthquake zone can consider adding earthquake coverage, when purchasing renters insurance. The policy comes with added benefits.

For example, renters Insurance:

Protects belongings anywhere in the world.

Renters insurance covers a person’s belongings anywhere in the world, whether your belongings are stolen from a car in Asia or a hostel in Europe, according to Bay Area-based insurance agent Carol Lee.

Offers replacement cost coverage or actual cash value.

The average renter owns about $20,000 in personal property, Lee says. Renters insurance allows a tenant to opt for replacement cost coverage (RCC) instead of actual cash value (ACV). Replacement cost value coverage allows a tenant to replace lost or damaged possessions with similar items at current market value.

For example, if you had a laptop you owned for two years before you file a claim for it, your insurance company would offer you the current market replacement value for a new laptop of similar specifications.

Offers personal liability.

If someone was hurt in your dwelling, or you accidentally injured someone, renters insurance can provide liability coverage for legal costs as well as medical payment to a policy limit, however, the insurance generally doesn't cover injuries to a tenant or other household members.

Covers additional living expenses.

If an accident happens and you can't stay at your place because of that, renters insurance can help you pay for a place to stay.

I got an instant quote from an insurance company’s online tool.

Generally, I have to pay $205 annually for a basic renters insurance plan, with $50,000 liability coverage, $10,000 personal property, and $250 deductible. If I add earthquake insurance, then that’s another $2 each month.

With housing costs already so high in the Bay Area, I’ll have to carefully weigh whether or not to buy renters insurance that includes earthquake coverage, but it’s helpful to know my options.