Earthquake Insurance for Personal Property

Everyone knows that earthquake insurance is needed if you own a house. Although few purchase it. But can you get earthquake insurance is you rent a property?

Thoughts on Earthquake Insurance for Renters

How to procure Quake Insurance as a non property owner

Is there a Value in getting Earthquake Insurance as a Renter?

First thoughts on Renters Quake Insurance:

If you are a renter and you live in earthquake country – there are not a ton of options for coverage from the peril of earthquake. Earthquake insurance can help provide money if your personal property is destroyed by seismic action, as defined by the policy.

However as opposed to Structual Property Earthquake Insurance which is sorely needed by most owners, Personal Property Earthquake Insurance necessity is not as clearly noted.

Consumers should get a quote themselves to determine affordability in their specific area.

How to Procure Quake Insurance for Non Property Owners:

The market for so called earthquake renters insurance policies is not as robust as property policies. In other words there are not that many options to purchase it. In California the best place to procure earthquake insurance is going to be from your current renters insurance company. Many, but not all of the coverage is underwritten through the California Earthquake Authority.

the market for so called earthquake renters insurance policies is not as robust as property policies

Another potential renters earthquake option can come from one of the independent earthquake vendors. This insurance option may or may not save you money. These independent earthquake insurers typically write standalone houses, but at least one of them may occassionally write a renters earthquake policy.

Another potential way to procure personal property coverage is through so called parametric insurance. This will be a topic another time. A short explanation of this is that Earthquake Parametric Insurance is a new type of quake insurance that may appeal to renters. Parametric earthquake insurance is simplified quake insurance.

Is there Value in getting Earthquake Insurance as a Renter?

This is a challenging question to address as a licensed insurance agent. Frankly if you feel there is a risk of an earthquake, than you should very much consider an earthquake insurance policy. However there are numerous and frankly far more complex considerations for the purchase of quake coverage for personal property as oppossed to building coverage. First and foremost, the building coverage need is quite obvious, while the personal property aspect more dupius. You absolutely need a safe home to live in. Second, specific personal property coverage in regards to earthquake forms can get complicated: Is that antique collectible covered? Third, there is the affordability element to it. Fourth is the challenge of thinking through how your personal property really would end up being destroyed in a covered land movement event. Lastly there is the paradox of the decutible. There are more considerations too.

The Real Need for Personal Property Quake Protection:

Lets run through some of these one by one, starting off with the challenge of Personal Property Quake Coverage. My first and fourth point are quite clearly closely linked. If the building that you live is destroyed, you need a new building, or home to find. Period end of statement. Yes I know that you could live in your car, or with a friend, but these are both super poor alternatives. If your dresser were destroyed what would you do then? I’d pile my cloths on the floor, personally. What happens if your cloths were destroyed? I’d buy new ones and not spend a ton on them. If I was low on money, I’d buy them at a thrift shop or Old Navy. It may be odd to say, but Id much rather live in a home with no furniture than have furniture with no home.

What Type of Earthquake Would be Required to Destroy your Personal Property:

Getting on the 4th point – what type of earthquake would it take to destroy your clothes? Frankly I don’t want to see that one. A quake though could easily destroy dishes, glasses, TVs, and artwork. [But wait is that artwork and or collectible breakable covered?] Therefore it is likely that a moderate quake will absolutely destroy some of your personal possessions. Every family is different. Each person spends their own money in their own unique way. From years of experience selling insurance my best guess is that many families have their most personal property dollars in the following categories: Cars, Cloths, Furniture, Electronics, and Jewelry. While autos can typically be covered for a quake by their own auto comprehensive policy, these other items would not be. Cloths, Furniture, and Electronics would have to depend on the homeowner/renters form with an EQ endorsement. The Jewelry – well that could be covered by its own inland marine policy. This really depends on its valuation and provenance.

Therefore the coverage of personal property for an earthquake for many familes could mostly be for Cloths, Furniture, and Electronics. That is certainly not all of it, but my guess is that its a lot of it. [Side note – read the section here on Personal Property Earthquake Sublimits below.]

What about heirlooms, art, collections, fine wine, gold bars…. you might want to first read your renters policy to discover the inadequacies of this policy form for protection from fire, before you discover the lack of earthquake coverage. In other words many of these items are excluded from renters insurance or at least only partially covered at a paultry amount. Many of these are subject to sublimits of coverage. [Read the section on PP Exclusions and Sublimits on EQ policies below.] These questions really help to frame the second point: That personal property coverage can get quite complicated when you get into exactly what is…and what is not covered.

Is EQ Coverage for Personal Property Affordable?

The third and final point is the affordability quotient, Affordability. Just go the the CEA Premium Caluculator tool yourself. Choose Renters, Choose a Start date, put in 2640 Steiner Street and it should auto populate with San Francisco, CA 94115. Go back and choose any insurance company, really and hit Get Estimate. Choose $100,000 in personal property coverage for earthquake with a 15% deductible, click No for Breakables coverage withe lowest loss of use you can request.

As of the writing of this article that premium in the 94115 zip code in 2023 is showing as $112 per year to insure Mrs Doubfire’s home from the peril of earthquake on a renters policy form for essentially just personal property. Mind you we are not discussing the value of Loss of Use, which could be significant.

So is $112 a fair price to pay for $100,000 in personal property coverage in San Francisco? We will alllow you to be the judge of that – but know that there is a 15% or $15,000 deductible. Therefore a small earthquake that only destroys – say $14,000 of your stuff – would NOT come into play. This is what I consider the paradox of the deductible. Also note that by massivily decreasing the deductible to 5% – it increases the premium to $221. [Please do go to the CEA site and do your own quote on your own home as it may be much lower and the rates can and will change.]

Additionally, as has been discussed on this site numerous times, this would potentially ONLY cover you from the peril of earthquake – not other forms of land movement. So if a landslide destroyed this house – this CEA policy would not be of assistance.

All of this boils down into the understanding that earthquake insurance for personal property/ renters is a far more complex consideration than building coverage, at least in my opinion.

As to the question of affordability – Yes Earthquake Insurance for Personal Property is quite affordable, in my opinion,

What Personal Property Items Have little to No Coverage on the CEA Renters Policy Form?

You have come up with a total dollar figure to insure your personal property and now you feel that you are ready to buy that coverage, but first read this:

Insurable Interest of Personal Property:

One of the first considerations with coverages for personal property [as with all insurance] is one of insurable interest. In other words who owns the personal property item? The CEA Sample Renters policy [BEQ-4B (01-2019 edition)] states: “Even if more than one person has an insurable interest in the property covered, we will not be liable: to you for an amount greater than your interest; nor…” A simple example of this might be a landline desk phone that is owned by both you and your roomate. If the policy is in your name only – guess how much coverage you might have?

Personal Property Sublimits on CEA Policies:

Using the same CEA Sample Renters policy BEQ-4B (01-2019 edition) -the following items are listed as having sublimits, which is defined as “the total limit of insurance for all loss in that category”:

• “$250 in the aggregate on all money, bank notes, coins and medals…”

• “$250 in the aggregate on all securities, checks, cashier’s checks, traveler’s checks, money orders, and other negotiable instruments…”

• “$3,000 in the aggregate on all computers and other electronic data processing equipment…”

• “$1,000 in the aggregate on all business property…”

• “$3,000 in the aggregate on all jewelry, watches, furs, precious and semi-precious stones, but not more than $1,000 for any one article.”

• “$3,000 in the aggregate on all collectibles, including but not limited to sports cards; collectible dolls, model trains, or toys….”

• “$3,000 in the aggregate on all beverages contained in bottles or in other glass…”

Those are some of the sublimited items. *Please note we have really boiled this list down and cut out parts, go read the actual entire policy for more specific details. And there are more details.

But you must ALSO look at the Excluded Personal Property items for Earthquake Coverage.

Personal Property Excluded Items on CEA Policies:

Coverage C items “We do not cover”:

1. “Pets, birds, fish, livestock, or other animals”
2. “Motor vehicles, riding lawn mowers, or any motorized land conveyance…””
3. “Any electronic equipment that is designed for operation by the electrical system of a motor vehicle…”
4. “Aircraft, including their parts and equipment.”
5. “Property that is not owned or used by an insured, including but not limited to the property of roomers,boarders and other tenants…”
6. “Valuable papers, records or data, including:. books of account, drawings….data stored on electronic data storage devices….”
7. “Artwork, including but not limited to paintings, drawings, or etchings…”
8. “Breakable items, consisting of the following…Glassware, crystal, china, ceramic, pottery….Figurines, vessels, vases, and other ornamental items made of crystal, china, pottery, ceramics, porcelain, glass, or marble.”
9. “Watercraft, including their furnishings, equipment, and….”
10. “Trailers”
11. “Trees, shrubs, or plants, or their containers.”
12. “Swimming pools, spas, and hot tubs, including all of their components.”
13. “Antennas and satellite dishes and any towers….

That is a full abbreviated list. Again, we have pulled out portions for brevity’s sake. You will want to read the entire policy and section to really understand it.

And the Business Definition on CEA Policies:

To revist the Business Property sublimit – the definition of which is defined on the policy form, page 5: ““Business property” means property pertaining to or intended for use in any (a) full-time or part-time trade, profession, or occupation, or (b) other activity intended for economic gain.”

The Main Takeaway with Personal Property Quake Coverage:

My professional takeaway with this is that personal property coverage is often far more complex than building coverage. The discussion of how much it could take to rebuild a building [and hence how much insurance is required] and the complexities of that are far simpler in many respects than determing property personal property coverage. To outline the cost of your structural home seems far simpler than outlining all of the individual items in it.

Think about it simply this way – How much did you Pay for your home? Now – How much did you Pay for all of your personal property? Mind you that how much you paid for your home is not the sole determination of insurance requirements – but at least its a benchmark number. What is the benchmark for personal property valuations?

Should you Purchase Earthquake Insurance for Personal Property?

thoughts on earthquake insurance for renters

Earthquake Personal Property protection is pretty complicated, fairly priced, and rather hard to qualify as to the exact coverages. Additionally a really severe quake would have to hit your location to destroy much of your personal property. There is also the challenge of the decutible which in my opinion, makes it a very curious mathematical calcuation.

Consumers should get a quote direct from the CEA or their Insurer to understand the costs and benefits involved.

Are you Advising Consumers NOT to purchase a Renters Insurance Earthquake Policy?

No, not at all. I am not advising consumers not to purchase earthquake insurance with Renters insurance. This article/post is totally about personal property coverage alone. Another important facet of renters quake policies is Loss of Use. Loss of use for renters may be super beneficial for someone whose apartment is destroyed by an earthquake. Or it may not be as helpful. One things if for sure is a small amount of loss of use if you live in an earthquake prone area could really be helpful.

Another type of coverage not reviewed is Breakables coverage, which for some, may be of assistance. Breakables coverage is often used on the earthquake coverage form.

*this article does not get into other coverage types and kinds found on a possible renters insurance policy, such as Loss of Use, which may greatly change the decision process for you – the end user. Loss of Use coverage can be invaluable for many Americans- check it out.