Shaken By Earthquake Alerts? What Homeowners Often Overlook About Seismic Risk

Arthur Parks

By Arthur Parks, Director, Underwriting, State Farm® & Board Chair, Federal Alliance for Safe Homes (FLASH)

A series of devastating earthquakes this summer – including a powerful 7.2 magnitude event in Venezuela and significant tremors in California, Colombia, Japan and the Philippines – have put seismic risk back in the headlines.

While these events were reminders of how quickly earthquakes can cause significant damage to entire communities, one key reminder is: Earthquake risk – and the financial consequences that can follow – may extend much farther than many people realize.

The U.S. Geological Survey estimates about 75% of the United States could experience damaging earthquakes. Earthquakes of magnitude 5 or greater have occurred in 37 states over the past 200 years – with areas around Memphis, Tenn., Oklahoma City and Charleston, S.C., in particular more at risk than many homeowners realize.

That doesn’t mean every homeowner faces the same level of risk. It does mean geography alone shouldn’t determine whether you think about earthquake preparedness.

For me, earthquake preparedness comes down to two questions: What can you do to reduce the potential for damage – and how prepared are you financially if significant damage still occurs?

Financial Preparedness Is Part of Earthquake Preparedness

For many people, earthquake planning naturally means gathering emergency supplies, creating a family plan or securing personal belongings in the home. While those steps matter, financial preparedness is an important part of the equation too.

One of the first questions homeowners and renters should ask is what their existing insurance does – and does not – cover.

There’s no one-size-fits-all answer when it comes to earthquake insurance. The decision can depend on factors such as where you live, your home’s earthquake risk and construction, and your financial ability to recover from a major loss. Understanding what your current policies cover – and where you may have gaps – is an important first step.

In most cases, standard homeowners insurance does not cover damage caused by earthquakes. Depending on where you live, earthquake protection may require separate earthquake insurance or an endorsement.

That doesn’t mean earthquake coverage is the right answer for every person or household. The important takeaway is to understand your individual risk, consider the potential financial impact and make an informed decision before an earthquake occurs.

An annual insurance review can be a good opportunity to discuss those risks, understand your coverage and explore available options with your agent.

Understand Your Potential Recovery & Rebuilding Costs

Knowing whether you have earthquake coverage is only part of the equation. It’s also essential to understand how your deductible works and what you could be responsible for paying after a loss.

Unlike some homeowners insurance deductibles that may be a flat dollar amount, earthquake deductibles are commonly calculated as a percentage of your home’s insured value.

For example, a 10% deductible on a home insured for $500,000 would equal $50,000 – a potentially significant out-of-pocket expense.

So rather than asking only, “Do I have earthquake insurance?”, I encourage homeowners to ask: “If I have a major earthquake loss, what would recovery actually require from me financially?”

Deductible options and how they apply vary, so talk with your insurance agent to understand your potential out-of-pocket responsibility before choosing coverage.

Also consider: Federal or state assistance may be available following a major earthquake, but that assistance may may come in the form of limited grants or other aid and typically isn't enough to fully rebuild your home or replace everything you've lost.

Pair Financial Safety with Home Resilience to Reduce Damage

Insurance can help finance recovery. Home resilience can help reduce the damage you need to recover from in the first place.

That’s why I think the strongest preparedness plans consider both.

Securing heavy furniture and appliances, safely storing breakable items, creating an emergency plan, and considering whether your home could benefit from a seismic retrofit all can help reduce the potential for damage and injury.

If you own an older home, particularly one built before 1980, it may be more vulnerable because it was constructed before modern seismic building codes were widely adopted. While no retrofit can guarantee your home will be undamaged during a major earthquake, strengthening it can improve its ability to withstand seismic shaking and may increase the likelihood that you and your family can safely remain there afterward.

Through State Farm's longstanding partnership with the Federal Alliance for Safe Homes (FLASH), we're helping homeowners better understand how they can strengthen their homes and prepare for natural disasters. As Board Chair of FLASH, I encourage you to explore Earthquake Strong for information on earthquake safety and home resilience.

You can also find guidance on what to do before, during and after an earthquake in the Simple Insights® How to Prepare for an Earthquake resource guide.

Technology can also play a role. I encourage homeowners in California, Oregon and Washington to download the MyShake® earthquake early warning app. Even a few seconds of advance warning can provide valuable time to protect yourself and put your emergency plan into action.

Think Beyond the Fault Lines

No one can predict when the next earthquake will occur.

But homeowners can understand the risks where they live, know what their insurance covers and look for practical ways to make your home and family more resilient.

Making informed decisions today can help protect what matters most and put you in a better position to navigate recovery if an earthquake does occur.