Earthquake Insurance in Massachusetts

November 16, 2020
Written by Paul West, PRMA

foundation damage earthquake in massachusettsIs there such a thing as earthquake insurance in Massachusetts? Up until November 2020, you may have doubted the need for this coverage—often available as an endorsement on an MA home insurance policy or commercial property/business owner’s policy. But the coverage is indeed very real and often worth looking into. Here’s a closer look at why:

How often do earthquakes occur in Massachusetts?

We don’t tend to think of Massachusetts as an earthquake-prone state, and yet quakes do happen here. Just this month, a 3.6 magnitude earthquake, off the coast of New Bedford, rocked communities from Falmouth, to Framingham, to northern points of our state, New Hampshire, and Maine. Thankfully, this most recent event did not cause any significant damage. But Bay State property owners aren’t always so lucky.

According to the Northeast States Emergency Consortium (NESEC), our New England region has seen 13 damaging earthquakes over the past 300 years. That translates into one damaging earthquake every 25 years—though recurrence intervals aren’t always evenly spaced. Meanwhile, the total number of felt earthquakes—over that same time span—totals more than 2,000! So, not exactly a common event, but not quite rare, either.

Is earthquake insurance in MA necessary?

The Department of the Interior has determined that 42 states have a “reasonable chance” of suffering a damaging earthquake; Massachusetts is one of them. We are not among the 16 states at the highest risk level, but we’re certainly not outside the hazard area. For reference, here’s the national seismic map.

Keep in mind that damage caused by earthquakes is NOT typically covered by your Massachusetts homeowner’s policy or BOP. Secondary damage that results from a “covered peril,” like a fire, for example, might be covered. But structural damage or foundational damage alone would not. (See below for more on earthquake exclusions.)

If you want to be sure your property’s structure and framework are protected (not to mention any inventory you may be storing there), you need to seek out special coverage.

Who needs earthquake insurance in Massachusetts?

Any answer to this question requires some level of subjectivity. Our advisors tend to think earthquake coverage is worth adding to just about every home insurance policy or BOP (for business owners), given the relatively modest cost (see below). And yet, only 9 percent of Northeastern homeowners carry it.

Without getting into a serious geology lesson, we can say some properties may be more or less susceptible. And not always for obvious reasons.

You may think your home or building is less susceptible to earthquake damage because it’s relatively new—i.e. built according to modern building codes. But there are many other factors (besides age and building materials) that tie into your risk level. That’s because “ground shaking” is not the only effect of an earthquake. “Surface faulting” and “ground failure,” including liquification, can also occur. So, variables like soil type, for example (e.g. is your property built mainly on sand and silt deposits?), or even the height of the water table in your area, underscore your earthquake risk. If you really want to go down the rabbit hole, here’s a study/map of liquification risks in the Boston area.

How severe is Massachusetts earthquake damage?

From previous centuries, we know that Massachusetts earthquake damage can potentially manifest in toppled walls, fractured chimneys, crumbled masonry, broken windows, and other types of structural losses. In other words: significant damage.

More recent (and more powerful) quakes in neighboring states illustrate other vulnerable areas of our homes and businesses. Porches and decks can separate and collapse. Ceilings can fail. Chimneys can crumble. Valuable possessions and electronics can slide off surfaces.

The more intense the earthquake, the more destructive it is. (California’s 1994 Northridge earthquake—a 6.7 on the Richter scale—caused nearly as much economic damage as Hurricane Sandy.) Yet, quakes in the 5.0 to 5.9 range can still cause significant damage to poorly-built or poorly-designed structures. And quakes of that magnitude are not out of the question in MA.

Does home insurance cover earthquake damage?

If an earthquake were to knock over your gas tank and cause a fire, which then burned your kitchen, your home insurance would likely step in to cover the kitchen repairs (secondary damage caused by a covered peril: fire), but not the damage to the gas tank itself (primary damage).

Similarly, if the earthquake shook your washing machine from its water valve, causing wood floor damage or leaks in the ceiling, you may have coverage for the appliance overflow, but not for any structural damage.

What does earthquake insurance cover?

Generally speaking, earthquake insurance would respond to property damage that resulted from ground shaking or ground failure. Collapsed walls, cracked foundations, broken chimneys: these are common examples. This type of coverage might also cover the removal of any debris and/or alternative living expenses if you need to evacuate for a time. For businesses, all the same items apply, and lost business income might also be available.

Not every policy is exactly alike, so it’s worth discussing policy terms and options with your MA insurance agent—especially if you have specific concerns or items you’d like to see covered. Much like adding flood insurance, adding earthquake insurance does not create a safety net for every item on your property. Notable exclusions in the yard include swimming pools, hot tubs, fences, patios, landscaping, and any separate structures (like detached garages, sheds, or gazebos). On the business side, paved walkways and fences not connected to the property would not typically be covered on standard coverage forms, but could be included by using endorsements.

What does earthquake insurance cost in MA?

Cost is dependent on multiple rating factors—including how much coverage you purchase and the amount you select as your deductible. In Massachusetts, you might expect to pay roughly $0.50 for every $1,000 in earthquake coverage you buy. Meaning, $100,000 in coverage limits ($1,000 x 100) would cost roughly $50 per year—or $4.17 per month. Your deductible is usually set as some percentage of the total coverage; often between 2 and 20 percent. Using our $100,000 example again, a 2 percent deductible would mean paying $2,000 out of pocket before your policy kicked in to pay for any remaining damage.

Where can I learn more about earthquake insurance in MA?

Our team of local agents is always happy to help! Call us at 508.339.2951 to get personalized advice on your home and your coverage needs.