Earthquake Buydown

If you live in an earthquake-prone area, you know how important it is to have the right insurance to protect your home. However, standard earthquake insurance policies often come with high deductibles, leaving homeowners responsible for significant out-of-pocket costs in the event of a claim. This is where earthquake buydown insurance can make a difference.

What is Earthquake Buydown Insurance?

An earthquake buydown is a supplementary insurance policy designed to reduce the deductible on your primary earthquake insurance. For example, most earthquake policies come with deductibles as high as 20% of your home’s insured value. With a buydown policy, you can lower this deductible, potentially to as little as 5% making it easier to manage repair costs after an earthquake.

Here’s how it works: If your home is insured for $500,000 and your earthquake policy has a 20% deductible, you’d be responsible for $100,000 before your insurance kicks in. A buydown policy can reduce that deductible to 5%, lowering your out-of-pocket cost to $25,000. This reduction ensures you can recover faster and with less financial stress.

What Does the Policy Cover?

An earthquake buydown policy specifically covers a portion of the deductible on your primary earthquake insurance. It does not replace your primary policy; instead, it works alongside it to reduce the financial burden in the event of an earthquake claim. This means you’ll be responsible for less of the deductible, enabling you to access your coverage sooner.

How Does It Compare to Regular Earthquake Insurance?

The primary difference is focus. Regular earthquake insurance provides coverage for damage caused by an earthquake. The buydown policy, on the other hand, doesn’t add additional coverage for damage, it strictly reduces the deductible you would need to pay out-of-pocket before your primary policy takes effect. The buydown policy only becomes active when your primary policy is triggered by a qualifying claim.

What Factors Affect the Cost of Coverage?

Several factors influence the cost of an earthquake buydown policy:

• The value of your home or insured building.
• The percentage of your primary earthquake deductible.
• The location and risk level of the insured property.
• The type of structure being insured.

Exclusions and Limitations

There are important exclusions and limitations to note:

• The primary policy must have earthquake coverage and be active at the time of loss.
• The buydown only applies if a claim exceeds the original deductible threshold of the primary policy.
• Coverage is available for detached dwellings; separate options are available for condos, including coverage for personal property and strata-assessed deductibles.

Why Consider an Earthquake Buydown Policy?

For homeowners in high-risk areas, an earthquake buydown policy provides significant financial relief, making it easier to recover from earthquake damage. By reducing the deductible, it ensures insurance coverage kicks in sooner, offering peace of mind during a stressful time.

This solution is particularly valuable for clients seeking to mitigate financial risks and protect their long-term investments in their homes. If you’re looking for a way to enhance your earthquake coverage, consider adding a buydown policy today.

Fill out the form below to contact one of our knowledgeable brokers and learn more about our Earthquake buydown coverage.