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{{main|Earthquake engineering}}
'''Earthquake insurance''' is a form of property [[insurance]] that pays the policyholder in the event of an [[earthquake]] that causes damage to the property.  Most ordinary [[homeowners insurance]] policies do not cover [[earthquake loss]].

Most earthquake insurance policies feature a high [[deductible]], which makes this type of insurance useful if the entire home is destroyed, but not useful if the home is merely damaged.  Rates depend on location and the probability of an earthquake.  Rates may be cheaper for homes made of wood, which withstand earthquakes better than homes made of brick.

As with [[flood insurance]] or insurance on damage from a [[hurricane]] or other large-scale disasters, insurance companies must be careful when assigning this type of insurance, because an earthquake strong enough to destroy one home will probably destroy dozens of homes in the same area.  If one company has written insurance policies on a large number of homes in a particular city, then a devastating earthquake will quickly drain all the company's resources.  Insurance companies devote much study and effort toward [[risk management]] to avoid such cases.

=== California ===

Earthquake insurance has become a political issue in [[California]], whose residents purchase more earthquake insurance than residents of any other state in the [[United States of America|U.S.]]  After the [[1994 Northridge earthquake]], nearly all insurance companies completely stopped writing homeowners' insurance policies altogether in the state, because under California law (the "mandatory offer law"), companies offering homeowners' insurance must also offer earthquake insurance.  Eventually the legislature created a "mini policy" that could be sold by any insurer to comply with the mandatory offer law: only [[earthquake loss]] due to structural damage need be covered, with a 15% deductible.  Claims on personal property losses and "loss of use" are limited.  The legislature also created a quasi-public (privately funded, publicly managed) agency called the CEA [[California Earthquake Authority]].  Membership in the CEA by insurers is voluntary and member companies satisfy the mandatory offer law by selling the CEA mini policy.  Premiums are paid to the insurer, and then pooled in the CEA to cover claims from homeowners with a CEA policy from member [[insurers]].  The state of California specifically states that it does not back up CEA earthquake insurance, in the event that claims from a major earthquake were to drain all CEA funds, nor will it cover claims from non-CEA insurers if they were to become insolvent due to [[earthquake loss]]es. [http://www.earthquakeauthority.com/CEAGeneralInformation.htm]

=== Japan ===

The government of [[Japan]] created the "Japanese Earthquake Reinsurance" scheme in 1966, and the scheme has been revised several times since.<ref>[http://www.sonpo.or.jp/protection/disaster/earthquake/0015.html 日本損害保険協会 － 地震に備えて], Retrieved on 2008-05-18.</ref><ref>{{Cite book
|author=Non-Life Insurance Rating Organization of Japan
|accessdate=2008-05-20
|year=2008
|month=April
|title=Earthquake Insurance in Japan
|edition=2nd ed.
|url=http://www.nliro.or.jp/english/earthquake.html
}}</ref>  Homeowners may buy earthquake insurance from an insurance company as an optional rider to a [[fire insurance]] policy.<ref>[http://www.mof.go.jp/jouhou/seisaku/jisin.htm 地震保険の概要（財務省）]</ref>  Insurers enrolled in the JER scheme who have to pay earthquake claims to homeowners share the risk among themselves and also the government, through the JER.  The government pays a much larger proportion of the claims if a single earthquake causes aggregate damage of over about 1 trillion [[yen]] (about US $8.75 billion).  The maximum payout in a single year to all JER insurance claim filers is 4.5 trillion yen (about US $39.4 billion); if claims exceed this amount, then the claims are pro-rated among all claimants.<ref>Art 4 of [http://law.e-gov.go.jp/htmldata/S41/S41HO073.html 地震保険に関する法律]</ref>

==See also==
*[[Earthquake performance evaluation]]
*[[Seismic retrofit]]

== References ==
{{Reflist}}

[[Category:Types of insurance]]
[[Category:Earthquake and seismic risk mitigation]]
[[Category:Earthquake engineering]]