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The National Weather Service issued tsunami warnings in Hawaii, Alaska, and parts of the West Coast Tuesday evening and Wednesday morning after an earthquake struck off the east coast of Russia. A tsunami is a series of unusually long waves caused by earthquakes at the bottom of the ocean. Waves reached as high as 5.7 feet above normal sea level in Hawaii, causing minor flooding, but there were no reports of significant damage in the U.S.
If the tsunami had been worse, thousands of homeowners could have been financially devastated. That’s because standard homeowners insurance excludes tsunamis and earthquakes. Tsunamis and earthquakes don’t affect the U.S. as often as hurricanes (which your homeowners insurance may also not cover), but they can be devastating when they do strike, so it’s important to check your coverage.
Key Takeaways
- Homeowners insurance usually excludes earthquake and tsunami damage.
- Earthquake insurance is a separate policy or rider that covers structural damage and living expenses caused by quakes, while tsunami damage can typically be covered by flood insurance.
- Very few homeowners have earthquake or flood coverage, due in part to rising premiums.
What Your Homeowners Insurance Policy Doesn’t Cover
A standard homeowners insurance policy covers damages from risks including fire, lightning, and frozen pipes. It also typically includes liability coverage. But most policies specifically exclude flood and earthquake damage. That’s because those events can cause significant, unpredictable losses that private insurers struggle to cover. For example, the 2011 earthquake and tsunami that struck Japan was the most expensive natural disaster of all time, costing $220 billion.
Rebuilding without insurance can be extremely expensive. Disasters typically drive up the cost of materials, services, and necessities. You might also face financial strain from service outages and lost income.
How to Insure Against Earthquake and Tsunami Damage
To cover earthquake and flood damage, you need to buy two separate policies. Here’s how each of them works.
Earthquake Insurance
Earthquake insurance is available as an add-on to your homeowners insurance or a separate policy. It covers damage to your home, belongings, and compensation if you can’t live in your home after a quake. Policies usually have deductibles of 10% to 20% of your home’s insured value.
Depending on where you live, you can buy earthquake insurance from some of the same companies that sell home insurance, such as Geico and Farmers. Some companies, like Palomar and QuakeInsurance by Geovera, specialize in earthquake insurance products. In California, you can buy earthquake insurance through the California Earthquake Authority (CEA), which partners with residential property insurers to provide earthquake policies.
Premiums vary based on your home’s age, location, structure type, and the insurer. Older homes and brick homes usually cost more to insure than newer, wood-frame homes, which often hold up better in earthquakes. You’ll also pay more in areas with a greater risk of earthquakes.
Tsunami Insurance
While earthquakes often cause tsunamis, earthquake insurance won’t cover damage from tsunamis. Tsunami damage is usually covered by flood insurance. You can buy a policy from the National Flood Insurance Program (NFIP) or some private insurers.
You can get a quote from the NFIP website and contact an insurance agent or provider to get coverage. The national average annual premium for an NFIP policy is $935 as of 2022. Prices are based on factors including:
- The likelihood of flooding
- Characteristics of the building
- Elevation and distance from sources of flooding
- Replacement cost of the building
- The building’s flood adaptations, such as flood vents
- Nearby levee performance
The Earthquake and Tsunami Coverage Gap
Very few people have the right coverage. In California, where 90% of the country’s earthquakes take place, only about 10% of residents have earthquake insurance. One factor is rising premiums for both homeowners insurance and hazard-specific policies like earthquake insurance.
The NFIP, which the federal government backs, was seeing declines in coverage, even before recent premium increases, partly because people underestimate the financial damage floods can cause, and partly because people expect the government will provide aid in the event of a disaster. But government aid is usually only enough to provide immediate relief and essential repairs, not extensive rebuilding.
“This low update is often due to a combination of high premium costs, a belief that structural upgrades or building codes will suffice, and a general underestimation of risk,” said Brendan Steinbrecher, a co-founder and director of claims for Tiger Adjusters, a public insurance adjusting company. “Similarly, flood insurance is often neglected unless a property is located in a high-risk flood zone, even though flooding can still occur outside of those zones.”
Outside of insurance, Steinbrecher suggested investing in structural upgrades for your home. Earthquake-resistant flexible framing and elevating your home to mitigate against flooding can be costly up front, but may lower your insurance costs.
The Bottom Line
Tsunamis and earthquakes are less common than other disasters, but can cause devastating losses. If you live in a tsunami or earthquake zone, your standard home insurance probably won’t help you. Before the next disaster hits, consider buying earthquake insurance, either as a separate policy or part of your homeowners insurance and flood insurance from the NFIP.
