If you read only one earthquake article before getting a quote, make it this one. The deductible is where homeowners get surprised.
Percentage, not flat
A standard homeowners deductible is usually a flat amount, like 1,000 or 2,500 dollars. Earthquake deductibles usually work differently. They are commonly a percentage of the insured value. The National Association of Insurance Commissioners notes earthquake coverage is typically subject to a separate deductible, often in the range of 10 to 15 percent of the cost to rebuild the home and contents.
What the percentage applies to
The percentage may be applied to the dwelling limit, the personal property limit, or another value defined by the policy. That detail matters. A 10 percent deductible on a 600,000 dollar dwelling limit is 60,000 dollars. Oregon’s Division of Financial Regulation gives a similar example: a home with 300,000 dollars of dwelling coverage and a 10 percent earthquake deductible would pay 30,000 dollars before coverage pays, and contents coverage can carry its own separate deductible.
A simple table
| Home insured value | 10% deductible | 15% deductible | 20% deductible |
|---|---|---|---|
| $400,000 | $40,000 | $60,000 | $80,000 |
| $600,000 | $60,000 | $90,000 | $120,000 |
| $800,000 | $80,000 | $120,000 | $160,000 |
| $1,000,000 | $100,000 | $150,000 | $200,000 |
These are illustrations. Your actual deductible depends on the policy wording and the value the percentage applies to.
Separate deductibles per coverage part
Dwelling, contents, and other structures may each carry their own deductible. That means the total you could pay out of pocket may be larger than any single percentage suggests. When you compare quotes, ask whether the deductible is one combined figure or several.
Why a loss can pay nothing
Because the deductible is large, a real earthquake loss can fall entirely below it. A home with 45,000 dollars of damage and a 60,000 dollar deductible may receive no payment. Earthquake insurance is built primarily for serious, structure-level loss, not for smaller cracks and cosmetic damage.
How to use the deductible when comparing
Before you compare premiums, compare deductibles. A cheaper policy with a higher deductible shifts more risk back to you. That can be a reasonable trade if you could absorb the deductible after a major loss, and a bad one if you could not. Ask yourself honestly what number you could actually pay, then compare the policies that fit it. The questions to ask before buying earthquake coverage build this in, and we can compare your coverage with you.
Questions to ask your advisor
- Is the deductible a percentage, and what value does that percentage apply to?
- In dollars, what would my deductible be on this specific home?
- Do dwelling, contents, and other structures each carry a separate deductible?
- Given the deductible, what size of loss would actually trigger a payment?
- What deductible could I realistically absorb after a major event?
Want guidance first? Compare your coverage. Already know what you need? Get a quote.
Continue the series
You are reading part 4 of Earthquake Insurance in Oregon and Washington: What Homeowners Should Know.
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