What makes earthquake insurance expensive?
Earthquake insurance often surprises people—not just by its cost, but by how uneven that cost can be. Two homes with similar values can receive dramatically different premiums, deductibles, and limits simply based on where they sit, how they’re built, and how the policy is structured.
This article explains the main drivers of earthquake insurance pricing: location-based risk, construction type, deductible structures, and coverage limits—and why small differences in these variables can translate into large differences in cost.
Location: the single biggest pricing factor
Earthquake insurance is fundamentally geographic. Pricing reflects not just state-level risk, but hyper-local fault exposure and soil behavior.
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Fault proximity:
Homes closer to active fault lines face higher modeled loss probabilities.
Insurers price based on seismic models, not historical memory.
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Soil composition:
Soft soils amplify shaking and increase structural damage.
Two homes miles apart can experience very different ground motion.
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Urban density:
Dense areas increase loss severity due to fire-following, access constraints, and infrastructure damage.
Post-quake losses often exceed direct shaking damage.
Earthquake pricing is less about “if” and more about “how bad it gets where you are.”
Building type: how your home reacts to shaking
Earthquakes don’t damage all buildings equally. Construction method heavily influences expected loss.
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Wood-frame vs. masonry:
Wood-frame homes tend to flex and perform better; unreinforced masonry performs poorly.
This difference alone can double or triple premiums.
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Age of construction:
Older homes often predate seismic codes or retrofits.
Year built is a proxy for code compliance, not craftsmanship.
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Foundation and anchoring:
Cripple walls, post-and-pier foundations, and lack of anchoring increase loss severity.
Retrofits can materially reduce pricing—but documentation is required.
Earthquake insurance prices how a structure fails—not just what it’s worth.
Why earthquake deductibles feel unusually high
Earthquake deductibles are structured differently from standard home insurance—and that structure is central to the premium.
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Percentage deductibles:
Earthquake deductibles are commonly 10%–25% of the dwelling limit.
A 15% deductible on a $600,000 home equals $90,000 out of pocket.
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Loss sharing:
High deductibles shift part of the catastrophe risk back to the homeowner.
Lower deductibles increase premiums dramatically.
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Separate deductibles:
Earthquake deductibles are distinct from all-peril deductibles.
They apply even if the quake also triggers fire or water damage.
Earthquake deductibles exist to make catastrophic coverage economically possible at all.
Limits, sublimits, and what’s actually insured
Earthquake policies rarely mirror standard homeowners coverage. Limits and exclusions shape both price and protection.
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Dwelling-only focus:
Many policies emphasize structural repair over contents or landscaping.
Contents and loss of use may be capped or optional.
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Loss of use limits:
Temporary housing coverage is often lower than on standard home policies.
Extended displacement is common after major quakes.
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Masonry veneers, pools, and exterior features:
These elements may be limited or excluded.
Non-structural damage can still be expensive.
Earthquake insurance prioritizes rebuildability, not full lifestyle replacement.
Why insurers charge more for earthquake risk
Earthquakes stress the insurance system itself. Pricing reflects capital exposure as much as homeowner risk.
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Catastrophic correlation:
A single event can generate thousands of claims simultaneously.
This is unlike fire or theft, which are dispersed.
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Reinsurance costs:
Insurers transfer quake risk to global reinsurers—at a price.
Rising reinsurance costs feed directly into premiums.
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Limited competition:
Fewer carriers are willing to deploy capital for earthquake risk.
Less competition means less pricing pressure.
Earthquake insurance is expensive because the losses are rare—but overwhelming.
Common questions about earthquake pricing
Why is earthquake insurance optional?
Because the risk is catastrophic and highly regional. Mandatory coverage would dramatically increase premiums for all homeowners.
Can retrofitting lower my premium?
Often yes. Bolting, bracing, and foundation work can materially reduce pricing—but proof is required.
Why do neighbors have cheaper earthquake insurance?
Small differences in soil, construction type, deductible choice, and limits can create large pricing gaps.
Earthquake insurance prices catastrophe, not convenience
Location, construction, deductible structure, and limits all shape earthquake premiums. High deductibles and constrained coverage are not signs of poor design—they’re how catastrophic risk becomes insurable at all. Understanding these levers allows homeowners to choose coverage intentionally, rather than being surprised by the price.