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  • Erin Endres

Minimizing Earthquake Costs for Low-Income Households

Based on long-term trends since 1900, about sixteen major earthquakes (indicating a magnitude of at least 7 on a 1 to 10+ scale) are expected to occur globally in any given year. Some states in the U.S. are far more prone to earthquakes due to their location along or near fault lines. For example, California experiences 90% of the nation’s earthquakes, and states like Washington, Missouri, Hawaii, and Alaska also face a high probability of earthquakes.

Despite this, only a relatively small percentage of Americans have earthquake insurance. In California, only 13% of residents in 2019 had earthquake insurance. In Alaska, 15% of homeowners were insured against earthquakes in 2018, and in 2017, only 11.3% of Washington’s residents were covered.

Many do not have earthquake insurance despite the risks, largely because of the prohibitively high costs. On average, insurance premiums are about $800 per year, and policy deductibles can reach 15-20% of the coverage limit. The cost of earthquake insurance can also vary based on factors such as the framing materials of the house, how old the house is, how many stories the house has, and what foundation materials were used in construction.

In the wake of the 6.4 magnitude earthquake that hit the Turkey-Syria border region, the physical devastation that can be caused by earthquakes is abundantly clear. What might be less talked about is how earthquakes can also create excessive, life-altering financial burdens.

For those without earthquake insurance, an earthquake can be a financially crippling experience. Not only do survivors face the upfront costs of replacing personal belongings and repairing their homes, but they also might have to pay for temporary housing and food in case their homes become uninhabitable. You might need to live outside of your home and pay for shelter for weeks or even months. Furthermore, even if a home is destroyed by an earthquake, the mortgage payments on the home may continue to remain due. To avoid these financial hardships and other burdens in the wake of a natural disaster, there are some steps you can take to ensure an easier recovery from earthquakes.

Have Important Documents Ready to Go

First, have all of your important documents and information organized and easily accessible in case you need to quickly evacuate your home during or after an earthquake. Consider creating a designated “grab and go” bag that includes documents you would need if you have to be away from home for an extended time. These documents should include copies of identification, copies of insurance cards, photos of belongings in your home (to help file an insurance claim), and anything you need to contact loved ones.

Secure Your Property and Belongings

Second, take measures to strengthen your home and protect expensive personal belongings from damage. Physically anchoring large pieces of furniture such as bookcases, desks, and tv stands can help prevent them from falling during an earthquake. Furthermore, installing latches on drawers and cabinet doors can help keep the contents inside of them safe and secure. If you are renting your current home, be sure to ask your landlord if you can secure furniture to the walls and what is the best way to do so that they recommend.

Retrofit Your Home

Third, retrofitting one’s home is one of the best ways to strengthen your home’s resiliency. Retrofitting involves replacing or repairing equipment, foundation, and other manufactured parts of your home. It can be done by bolting your home to the foundation, bracing the water heater and chimney, installing automatic gas shut-off valves, and strengthening cripple walls with plywood. Retrofitting your home can lower earthquake insurance costs, reduce damages, and possibly bring your home up to code.

Retrofitting can be an expensive process. However, there are some government programs that offer grants and loans to make retrofitting an accessible option. Low-income residents affected by natural disasters can apply for community block grants from the U.S. Department of Housing and Urban Development (HUD) to strengthen their homes against earthquakes - for more information, call (510) 577-6004. Homeowners who are low-income or over the age of 62 can acquire loans to repair or improve their homes through the U.S. Department of Agriculture Section 504 Home Repair program.

You can also visit the HUD website for information on federal loan programs, community-based resources, and consumer advice. You might also be eligible for the HUD Title I Property Improvement Loan Program which grants homeowners who are able to make regular monthly repayments the ability to make large and small home improvements that substantially protect or improve the basic livability or utility of their property. For additional information on that program, call (800) 767-7468 and request item number 2571.

Know the Ins and Outs of Federal Assistance

Federal assistance for recovery after an earthquake exists, but it might not be as helpful as one would hope. The U.S. Small Business Administration offers Physical Damage Loans of up to $200,000 for homeowners to rebuild their homes and $40,000 for homeowners and renters to replace or repair personal property, but this money needs to be repaid. Additionally, FEMA offers Individual Assistance (IA) to those denied a loan, but it will likely not cover all costs needed to financially recover. The average FEMA IA payout is about $5,000. Furthermore, FEMA’s Individual Assistance is notorious for wrongful denial of IA to eligible low-income disaster survivors. So, it might be best to invest money in improving the earthquake resiliency of your home in the first place if possible.

Talk to Your Insurance Provider

If you have the ability to pursue earthquake insurance, here are some questions that you can ask your insurance agent to guide the process:

  • Is my home likely to suffer earthquake damage?

  • Does my insurance already cover damage caused by earthquakes?

  • How much would earthquake insurance cost for me and my home?

  • What is covered by earthquake insurance?

  • What is not covered by earthquake insurance?

  • How much earthquake coverage do I need?

  • What other options are available to recover from earthquake damage?

Buyer’s Guides and More for Earthquake Insurance:

Additional Resources:

For more information, visit ISD’s earthquake page for regular updates and tips.


Disclaimer: The views and opinions expressed here are those of the authors and do not necessarily reflect the official policy or position of the Institute for Sustainable Development (ISD). Any content provided by our bloggers or authors are of their opinion, and are not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything. ISD values and welcomes diverse representations and opinions.

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