Unlike most Homeowners policies that have a single deductible that applies to both structures and personal property, earthquake insurance can have multiple deductibles. And they are often higher than standard Homeowners deductibles.
What we see most often in the industry is deductibles of 10-20% of the overall dwelling coverage limits. If your earthquake insurance offers $300,000 of dwelling coverage and your deductible is 20%, you’re looking at a $60,000 deductible in the event of a total loss. What that means for you as you go to rebuild is you’ll get a check from the earthquake insurance company in the amount of your dwelling coverage minus the deductible. In our example, you would get a check for $240,000 to help you rebuild a $300,000 home. Quite a difference. More recently some carriers have come out with more deductible options such as 2,3 and 5%. These would increase the premiums in some cases significantly, but its always great to have options.
When we help our customers compare policy options, we always check the deductible amount, whether multiple tiers are offered, and if there is one deductible for the policy or multiple.
Depending on the risk of your area, you may want to opt for a balance between premium cost and deductibles. If you live in a high-risk area and can afford the premiums, opting for the lowest deductible could maximize your return in the event of a claim.