When a 5.2-magnitude earthquake rattled San Diego earlier this week, it did more than shake walls—it shook Californians into reconsidering how prepared they truly are for the next "big one."
It's a familiar story: after every tremor, the phones of insurance agents ring nonstop. And while most homeowners assume their standard policies cover "acts of nature," the reality is quite different. As insurance expert Karl Susman explained in a recent interview, traditional homeowners' insurance does not cover earthquake damage.
This seismic event has reignited a long-standing conversation in California's insurance community: why are so few homeowners covered, and what can be done to close that protection gap?
Earthquakes are part of California's DNA. The state experiences hundreds of small tremors each year, but it often takes a noticeable jolt—like this 5.2 quake—to remind residents how vulnerable they are.
According to the California Department of Insurance, fewer than 10% of homeowners statewide currently carry earthquake insurance. That number drops even lower in Southern California counties, where high deductibles and complex policies discourage many from buying coverage.
Susman describes this recurring pattern as "a cycle of panic and neglect":
"Every time there's a quake, people rush to buy insurance. Then a few quiet years go by, they cancel their policies, and the cycle starts all over again."
But in today's insurance climate—where wildfire, flood, and climate-related risks are already stretching the system—many experts warn that earthquake exposure may be the next crisis waiting to happen.
One of the biggest misconceptions about earthquake protection is that it's included in homeowners or renters insurance. It isn't.
"Homeowners insurance specifically excludes earthquakes," Susman explained. "The only way to have coverage in the event of an earthquake is to purchase a separate policy."
That exclusion isn't just for shaking or cracking foundations—it extends to nearly all structural and personal property damage directly caused by ground movement.
So if your home collapses during a quake, or your walls crack from seismic vibration, you're on your own financially—unless you've secured a dedicated earthquake policy.
The largest player in the state's earthquake insurance market is the California Earthquake Authority (CEA).
Created in 1996 after the devastating Northridge Earthquake forced insurers to pull out of the market, the CEA is a nonprofit, publicly managed but privately funded organization. It works in partnership with dozens of major insurance companies that sell CEA-backed earthquake coverage as an optional add-on to their homeowners policies.
"It's not funded by the state," Susman clarified. "It's a separate pool of money that exists specifically to pay out earthquake claims."
While the CEA covers most policies, several private insurers also offer standalone or supplemental earthquake coverage—sometimes with different structures, coverage options, and deductible levels.
Susman advises consumers to shop around:
"It makes sense to get quotes from multiple providers. One company could be thousands cheaper than another for the same home."
The biggest obstacle for most homeowners? Deductibles.
Unlike a typical homeowners policy, which might have a $1,000 deductible, earthquake insurance deductibles are a percentage of the total insured value of the home—often ranging from 10% to 25%.
For example:
On a $1 million home, a 15% deductible equals $150,000 out of pocket before coverage kicks in.
That high threshold is why many homeowners view earthquake insurance as impractical—especially when mild or moderate damage may not exceed the deductible.
However, as Susman points out, that's not the purpose of this kind of coverage:
"These policies aren't designed to replace your dishes or your TV. They're designed to help you rebuild your home if it's destroyed."
In other words, earthquake insurance is catastrophic protection, not a convenience policy. It's about financial survival after a major quake, not reimbursement for minor cracks or cosmetic repairs.
While every Californian lives with some level of seismic risk, certain homeowners are at significantly higher exposure, including:
Owners of older homes — especially those built before 1980, when seismic building codes were weaker.
Properties on or near fault lines, including the San Andreas, Newport-Inglewood, and Rose Canyon Faults.
High-value properties — since reconstruction costs can easily exceed policy limits.
Homes with raised foundations, unreinforced masonry, or hillside construction — all of which are more vulnerable to shaking damage.
If you fall into any of these categories, insurance experts like Susman say earthquake coverage isn't optional—it's essential.
A typical CEA policy can cost anywhere from $800 to $3,000 annually, depending on location, home value, age, and deductible level.
For many Californians, that price feels steep—especially when weighed against other rising insurance costs. But consider the alternative: rebuilding a destroyed home without coverage could cost hundreds of thousands, if not millions, of dollars.
Susman's advice?
"If you can't afford to rebuild your home out of pocket, you can't afford not to have earthquake insurance."
He also encourages homeowners to think beyond property value: where will you live if your home is uninhabitable for months after a quake?
CEA and private policies can include loss of use coverage—helping pay for temporary housing, transportation, and even furniture replacement while repairs are underway.
If the San Diego quake has you considering coverage, here are key steps Susman recommends:
Most major insurance companies offer earthquake coverage through the CEA. Adding it to your existing homeowners policy may simplify billing and claim handling.
Private insurers may offer more flexible deductibles or higher coverage limits for luxury or high-risk homes.
Use online tools like the USGS ShakeMap or the California Department of Conservation's Earthquake Zone Map to see your proximity to active faults.
Lower deductibles mean higher premiums—but also lower out-of-pocket costs after a quake. Find the middle ground that fits your risk tolerance and budget.
Ask if combining earthquake, fire, and homeowners coverage with one carrier can yield multi-policy discounts.
Insurance is one piece of earthquake readiness—but prevention and preparedness are just as crucial.
Experts recommend:
Seismic retrofitting older homes, especially those with crawl spaces or unreinforced walls.
Securing heavy furniture, water heaters, and appliances to prevent injuries.
Creating an emergency kit with food, water, first aid, and flashlights for at least 72 hours.
Documenting valuables with photos or videos for insurance purposes.
The California Earthquake Authority even offers grants through its Earthquake Brace + Bolt program, helping homeowners strengthen foundations and reduce potential losses.
For decades, California has responded to each major earthquake with temporary spikes in preparedness—then slipped back into complacency. But with home insurance markets tightening statewide, that reactive mindset is no longer sustainable.
"You can't wait until after a disaster to prepare," Susman emphasized. "Once the shaking stops, it's too late to get covered."
The San Diego quake serves as both a reminder and an opportunity—to rethink not just whether you're insured, but whether you're truly prepared.
Earthquake insurance isn't for everyone—but understanding what it does (and doesn't) cover is essential for every Californian homeowner.
Whether you live in San Diego, Los Angeles, or Sacramento, the question isn't if another major quake will strike—it's when.
"You insure your home for fire even though you hope it never burns," Susman concluded. "Earthquake coverage is no different. It's not about fear—it's about financial survival."
So as Californians clean up from the latest tremor, there's no better time to review your policy, explore your options, and take steps toward a more resilient tomorrow.
