Earthquake Insurance Exclusions

Earthquake Insurance, such as with all insurance is subject to exclusions. Not all California policies are the exact same, but they tend to fall along some common lines. Earthquake Insurance is subject to all sorts of exclusions including, but not limited to the following:

• War, Nuclear. and Pollution
• Fire and Explosion
• Ordinance and Law / Planning Construction & Maintenance
• Water Damage and Other Earth Movement
• Neglect or Decisions and or Actions

Those are just the headlines of exclusions from a personal earthquake insurance policy. (There are more, Read on.) Learn about “Caused by” , “Contributed to” , “Aggrivated by” …. “direclty or indirectly.”

What is an Exclusion on an Earthquake Policy:

More on Earthquake Coverae Exclusions.

A typical opening statement found in the CEA Choice Policy (BEQ 3C 01-2019 Edition) introduces us to the list of exclusions by more or less defining what an exclusion is relative to an earthquake policy.

This California Earthquake Authority policy states “Without limiting the above, even if a loss directly or indirectly is caused by, is contributed to by, results from, or is aggravated by an earthquake, we do not insure for any loss that is caused directly or indirectly by, or that in any way results from, is contributed to by, or is aggravated by, any of the following…”

[What follows from here are a compilation list of exclusions taken from many insurers (not just the CEA policy.)]

The key terms are “caused by…contributed to…results from or is an aggravated by an earthquake…” and “directly or indirectly.”

What are the Earthquake Insurance Exclusions?

Please read your OWN Earthquake Policy for exact details.

Below is a list of some of the various exclusions on some US Earthquake Insurance Policies. Each insurer has their own set of exclusions. Read your own policy to discover your earthquake coverage exclusions.

1. Fire:

An Earthquake ignited fire is not covered by an earthquake policy. Depending on the state in which you live in it ‘may’ be covered by your homeowner policy. In California, an Earthquake ignited fire is required to be covered by an admitted policy. Fire is a very common earthquake insurance exclusion.

2. Ordinance and Law:

The Harco National CA Comprehensive EQ policy defines Ordinance or law as “meaning enforcement of any ordinance or law regulating construction, repair, or demolition of a dwelling or appurtenant structure, except as specifically insured under Coverage E. Limited Building Code Upgrade.”

3. Water Damage:

Earthquake policies will not protect you from Tsunamis, surface water, and tidal waves. A example can be found in the Geovera Comprehensive Policy MEQ1 09-07: “Water Damage, meaning flood of any nature or tidal wave, tidal water, tsunami, waves, surface water, overflow of a body of water or spray from any of these.” The exclusion from Geovera does not seem to mention pressurized and unpressurized plumbing within a dwelling.

The California Earthquake Authority Choice Policy (BEQ 3C 01-2019 Edition) does explicitly say that among other water coverages: “(i) The release of water from water heaters, refrigerators, or water supply pipes within the dwelling… and… Precipitation (including rain, snow, hail, or sleet) entering a building through an opening in a roof or wall, if the opening is the direct result of damage from an earthquake that commences during the policy period as part of a seismic event that commences during the policy period.” – these the water exclusion “does not exclude loss” from these items.

However it is fairly clear that outside water in most forms is excluded from this earthquake insurance policy. It is clear that if an earthquake starts a tsunami your earthquake policy is not required to respond.

4. Explosion:

Most of the insurers fail to specifically define the Earthquake Explosion definition. Perhaps it is because it is obvious. Unfortunately Vocabulary.com has four separate definitions of explosion. Perhaps the Earthquake Insurers are referring to: “the act of exploding or bursting.”

My opinion is that they are referring to an explosion which usually involves, but no necessarily a fire. From Gas, Propane, or Other combustibles. So the explosion definition might simply be an expansion of the EQ fire exclusion. Potentially a broadening of this exclusion as an explosion might not be accompanied by fire.

5. Neglect:

Neglect is common to many property insurance policies. If you fail to take action to protect your property your insurance coverage could be void. How this would manifest itself with an EQ policy is not exactly clear.

The CEA states the Neglect Exclusion as such: “Your neglect to take all reasonable action to save and preserve covered property at the time of and after a covered loss.”

It is exceptionally unclear what act you could perform to protect your property “at the time of” of an earthquake. However, I can potentially see failure to ” take all reasonable action… after a covered loss” might be possible.

6. War:

War is another fairly common property exclusion, not at all specific to earthquake property policies. Most property policies will not protect you from War damage. If war is involved in starting an earthquake its hard to see how you would have any property coverage. The CEA Excludes war here.

The War definition could include “acts of terrorism.”

7. Nuclear Hazard:

In no way shape or form will your earthquake policy protect you from any sort of nuclear hazard; War or peacetime – there is no coverage for nuclear hazards. This too is a common exclusion of most property policies.

8. Pollution:

These definitions can vary widley, but they often appear such as the CEA Choice Policy (BEQ 3C 01-2019 Edition) : “Pollution of groundwater, land, and personal property, including all loss, damage, costs, and expenses that arise out of or are caused by pollution or pollutants, and any cost or expense to test for, monitor, clean up, remove, contain, treat, detoxify, or neutralize pollutants. The terms “pollutants” and “pollution” mean any solid, liquid, gaseous, or thermal irritant or contaminant, including, but not limited to, smoke, vapor, soot, fumes, acids, alkalis, chemicals, asbestos, and waste. The term “waste” includes but is not limited to material to be recycled, reconditioned, or reclaimed.”

It is clear that an EQ insurer is not going to pay for pollution leaking out of your property. What might be less clear is if somehow pollution were to cause an earthquake? Would your home be covered in this situation?

9. Planning, Construction or Maintenance:

“Planning, construction or maintenance, meaning faulty, inadequate or defective planning, zoning, development, surveying, siting, design, specifications, workmanship, repair, construction, grading, compaction, maintenance repair materials, remodeling, or maintenance of part or all of any property (including land, structures or any improvements) whether on or off the “residence premises”.” This is listed in the Palomar Value Select Policy (PSIC-VS VO (02-17)).

In my opinion the Planning, Construction or Maintenance exclusion is closely associated with the Neglect Earthquake Exclusion.

10. Decisions and or Actions:

This exclusion could seem mystical and odd to a typical consumer. It is a bit difficult to explain and understand. A Palomar Value Select Policy states (PSIC-VS VO (02-17)) “I. Acts or Decisions, including the failure to act or decide, of any person, group, organization or governmental body.”

11. Fungi:

CEA Choice Policy (BEQ 3C 01-2019 Edition) does not cover insured’s for Fungi, including but not limited to the cost to repair or replace property damaged by fungi or to test for, monitor, abate, mitigate, remove, dispose of or remediate fungi, except for loss or damage to the dwelling…subject to the $5,000 sublimit.”

12. Theft:

Some policies will not pay to protect your home from theft or vandalism following an earthquake. Other policies seem more silent on this, which does not imply coverage.

13. Power Failure:

The CEA Choice Policy (BEQ 3C 01-2019 Edition) does not protect you and your property from “Power Failure, meaning the failure of delivery of electrical power to the dwelling.” This seems rather obvious, but is stated in some policies.

14. Intentional Loss

Intentional Loss as defined by Palomar (PSIC-VS VO (02-17)) “Intentional loss, meaning any loss arising out of any act committed: (1) By or at the direction of “you” or any “insured…and (2) With the intent to cause a loss.”

Why the Intentional Loss exclusion is found in a an earthquake policy I can not say.

15. Companion Policy Exclusions:

The Palomar Value Select Policy (PSIC-VS VO (02-17)) specifically excludes: “Any risk of loss insured by the companion policy whether collectible or not.” This exclusion may or may not need to be in a given policy, none the less this insurer does include it. A principal of insurance is that you cannot receive more than you lost, this generally prevents property policies to be double paid out in the event of double coverage. On some policies in other types of insurance this could be considered similar to a Duplicate Insurance Exclusion.

The above list is a compilation list and lists many exclusions from numerous carriers. (Most of these carriers have some, but not all of these exclusions.) Read your own policy to inquire.

Also Note: That there may be other exclusions that exist on other policies or in other non US countries. This is our attempt to provide a partial and not necessarily complete list.

A Quick Summary of Earthquake Insurance Exclusions:

Earthquake Insurance Policies are subject to all sorts of exclusions. They only way a consumer can determine which exclusions pertain to themselves is by reading their own EQ policy. Many exclusions found on Earthquake Policies are logical and easy to understand. Others less so. One of the most important exclusions to understand, is that almost all US Home Insurance has a Land Movement Exclusion. This means that ordinary, unendorsed HO3 policies are NOT covered for Earthquakes or almost any other form of earth movement.

Keep in mind that just because the event is not excluded, still does not mean that something is covered. For Earthquake Insurance – the definition of an earthquake must be met. In addition all other terms and conditions must be present.

Please read your own insurance policy to see a complete list of exclusions. Speak with a licensed agent in your jurisdiction to buy, ammend, or cancel any insurance policiy at any time.