How Earthquake Insurance Deductibles Actually Work (Real-Life Example)
June 4, 2025
What Makes Earthquake Insurance Deductibles Different?
When shopping for earthquake insurance, one of the most common questions we get is: “How does the deductible work in real life?” It’s a valid concern. Earthquake insurance deductibles are not fixed dollar amounts like you may be used to with auto or homeowners insurance. Instead, they are percentage-based — and understanding what that means can make a big difference in how you evaluate your coverage.
Let’s walk through a real-life scenario to explain how this works.
Real-Life Example: A $1 Million Home with Earthquake Coverage
Let’s say you own a home valued at $1,000,000. Your earthquake insurance policy includes the following coverage:
- Dwelling coverage: $1,000,000
- Other structures (e.g., patio, pool): $100,000
- Personal property: $100,000
- Loss of use: $100,000
You chose a 10% deductible, which is common — though deductibles can range from 2.5% up to 25%.
Here’s how the deductible would apply in different situations:
Three Earthquake Insurance Scenarios
Scenario 1: Your Home Is a Total Loss
After a major earthquake, your home is a total loss. You must meet your $100,000 deductible (10% of $1 million). The insurance company will then pay out the remaining $900,000 toward rebuilding your home.
Scenario 2: Your Pool and Patio Are Damaged
Let’s say your home itself is fine, but your pool and patio suffer major damage. You have $100,000 in coverage for other structures and a 10% deductible — that’s a $10,000 deductible for this section of the policy. After you meet that, the insurance company would pay up to $90,000 toward repairs.
Scenario 3: Breakables and Interior Items Are Damaged
Now imagine the quake doesn’t damage your home or outdoor structures — but inside, your glassware and dishes are destroyed. That’s considered personal property damage, and you have $100,000 in coverage for it. You meet your $10,000 deductible, and the insurance company pays the remaining $10,000 on your $20,000 loss.
Even in a less severe earthquake, your policy can still work in your favor.
Why This Example Matters for Homeowners
Too often, homeowners assume earthquake insurance only helps if the house is completely destroyed. But as this example shows, coverage also applies to partial damage — including items like breakables and loss of use. A good policy helps you recover financially from all kinds of earthquake-related damage, not just worst-case scenarios.
Need Help Choosing a Deductible? We Can Help
Choosing the right deductible and coverage amounts is a balance between affordability and risk tolerance. If you’d like help selecting the best earthquake insurance policy for your home, our team at EarthquakeAgent.com is here to help.
Visit EarthquakeAgent.com to get your free quote today, or give us a call to speak with a licensed earthquake insurance expert.