What Type of Insurance Covers Natural Disasters in California?

Natural disaster insurance safeguards California homeowners, renters, and commercial property owners from property damages and financial losses caused by catastrophic natural events. While some common California natural disasters, such as hail, fire, storms, and lightning are already covered by your standard property insurance, flood insurance and earthquake insurance are supplementary coverages that are purchased as an extra option to the policy or as stand alone policies. Flooding, fires, and earthquakes are the main types of natural disasters in California.

Earthquake insurance coverage can be purchased through a variety of insurance companies on the market. Most of them sell coverage administered by the non-profit California Earthquake Authority - CEA.

If you live in an area identified by the National Flood Insurance Program as a community in danger of flooding, you can purchase standard flood insurance up to the $250,000 limit from NFIP Direct through an insurance agent. If additional flood coverage is needed or if you are not in the NFIP designated community, you can get additional flood insurance from a secondary - Write Your Own insurance company.

When deciding on the natural disaster insurance coverage, discuss your needs with a California-licensed P&C insurance agent who can help you pick the best coverage based on your insurance needs. Here are the top 50 insurance companies that offer one of more natural disaster coverages to customers in California:

What is Natural Disaster Insurance?

Natural disaster insurance offers Californians property protection in the event of unforeseen catastrophic weather events, such as droughts, floods, and earthquakes. Unlike homeowners, renters, and commercial property insurance, which are usually multi-peril policies, disaster insurance is often a single coverage solution for a distinct natural disaster such as an earthquake.

Do Disasters Need Insurance Coverage in CA?

Yes, all disasters need insurance protection to cover damages/losses to an insured’s property and personal belongings. Although generally broad, protection from traditional P&C insurance policies does not extend to catastrophic weather perils like earthquakes. Consequently, renters and property owners must purchase separate disaster coverage to protect their properties, families, and personal belongings from disaster-related losses.

Disasters frequently cause large-scale property destruction, making residential and commercial property repairs or rebuilding costs too high for California residents to cover out of pocket. For instance, the average flood insurance claim paid in 2018 was $42,580 The largest group of faults in the earth’s crust are in California, effectively making the state a hotbed of potential earthquakes. In 2021, extreme natural disasters destroyed properties worth over $300 million in the Golden State.

Furthermore, climate change is increasing the frequency and scope of extreme weather disasters, placing residents who have migrated to disaster-prone areas in the state at risk. For instance, 7.3 million Californians reside near rivers and floodplains, increasing the magnitude of potential flood-related damages/losses in the event of flooding. Without the appropriate disaster insurance coverage, a large portion of California’s population is at risk of property damage.

What Types of Natural Disasters Are Common in California?

Certain types of disasters are prevalent in the Golden State, and they include:

• Wildfires: Wildfires are statewide hazards that typically occur when dry conditions during droughts and severe heat waves are prolonged. However, climate change has resulted in wildfires becoming year-round disasters, especially in California. All 58 counties are in danger of fires. During the 2018 wildfire season, the economy of California sustained almost $150 billion in damages.

  Although standard property insurance covers fire-related damages, wildfires still cause widespread destruction to residences, commercial properties, infrastructure, farming communities, and local wildlife in the Golden State. As a result, property owners and renters residing in high-risk wildfire areas, such as Los Angeles, need to have adequate coverage limits on their policies to avoid being underinsured. Residents can also access the state’s FAIR Plan for basic fire insurance if traditional property coverage is unavailable. Standard property coverage is often unavailable for California residents living in high-risk wildfire areas because most insurers are averse to the high wildfire risk in these areas. It may also be unavailable for limited or fixed-income homeowners who cannot afford rising insurance premiums caused by the increased number of wildfire events in the state.

• Floods: Floods are common in California and regularly cause statewide property damages and losses. They could result from excessive rainfall or a storm surge. Since flood damage is not covered under standard commercial and residential property insurance policies, the Federal Emergency Management Agency (FEMA) administers the National Flood Insurance Program (NFIP), which offers flood coverage to residents in eligible communities within flood-prone areas. FEMA formally partners with these eligible communities, or participating communities, to implement different flood mitigation activities to minimize California’s flood risk. For additional flood insurance coverage - speak with a private flood insurer.

• Extreme Heat: Heat waves, commonly marked by excessively high temperatures, create perfect conditions for droughts and wildfires in California. In 2020, extreme temperatures caused heat waves that led to power grid disruptions and worsened the health of older Californians and residents in low-income communities. Extreme heat-related power grid disruptions are triggered by increased power consumption, resulting in increased power costs for businesses and homes. Droughts are common in all 58 counties.

• Earthquakes: Earthquakes are one of the top disasters in the state. 2/3rds of all earthquakes in the U.S. happen in California. Their regular occurrences are caused by the movements of several fault lines that run under the state and cause major property damages/losses. Although they are not covered under regular residential and commercial property insurance, you can still purchase a separate policy to protect your home/business and other personal assets.

  Earthquakes are common in the following California counties: Humboldt, Imperial, Kern, Los Angeles, Napa, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara, Solano, Sonoma, Ventura.

What Types of Disasters Are Insurable in California?

In California, all types of natural disasters are insurable and can be covered by the requisite disaster insurance, including:

• Flooding: California flood insurance can be purchased from the National Flood Insurance Program (NFIP) through licensed P&C insurance agents or through the private flood insurance companies, which offer a so-called “Write Your Own” flood insurance policy. Flooding in California typically occurs as a result of heavy rains and infrequently from the storm surge.

• Wildfires: Standard residential and commercial property insurance offer basic coverage for fire-related damages and losses. California policyholders who expect broader protection against fire-related damages can purchase additional coverage, especially if they own luxury possessions.

• Hailstorms: Hail damage to structural properties are usually covered under standard homeowners and commercial property insurance policies in California, although subject to coverage limits. Hailstorms, or thunderstorms that form hailstones, are rare weather conditions in California but have recently been observed in southern parts of the state.

  Policyholders seeking expanded hail coverage and/or residing in high-risk hail areas may need to buy additional hail coverage as an endorsement or increase their coverage limits. However, insurance coverage for certain damaged personal property, such as cars, is not provided under traditional property insurance but rather covered under comprehensive auto insurance.

  If you reside in a hail-prone area such as Southern California, ensure that adequate hail coverage limits are included in your policy. Discuss your coverage needs with a licensed insurance agent.

• Tsunamis: A tsunami is a wave of up to 100 feet in height, traveling at around 30 miles per hour when it hits the shore. It primarily causes flooding. Tsunamis are insurable but not under standard California homeowners, renters, or commercial property insurance, which excludes coverage for flooding. Purchasing flood insurance from the NFIP can offer protection from flood damages caused by tsunamis. Tsunamis occur infrequently and when they do happen, they affect predominantly the western portion of the state, along the coastline. T.

• Landslides and mudslides/mudflows: Like other earth-movement-related perils, landslides and mudflows are not covered under standard property insurance, unless they were caused by wildfires or any other covered peril:

  • Mudslides can be insured by purchasing Flood insurance for your California home or business property.
  • Landslides can be covered by a Difference in Conditions (DIC) policy, which typically combines Landslides, Mudflows, Floods, and Earthquakes coverages under one policy.
  • Auto insurance uses its comprehensive coverage to protect vehicles from landslides and mudslides. No additional coverage is needed.

• Droughts: Droughts typically cause decline in crop production and increase the likelihood of property and vegetation fires. Droughts are common in all 58 California counties. While fires are covered by standard property and farm insurance, California crops can be insured from drought using the USDA Assistance Programs. Sinkholes resulting from the drought are typically covered under a separate sinkhole insurance policy.

What Types of Disasters Are Not Insurable in California?

Generally, every disaster is insurable in California, although standard residential and commercial property insurance does not cover damages/losses from severe natural disasters. Earthquakes, droughts, and floods are some typical examples of such excluded perils, and interested policyholders can purchase stand-alone coverages to protect themselves and their valuables in the event of a disaster.

What Are the Types of Disaster Insurance in California?

In California, policyholders can opt for one or more of the different types of disaster insurance to protect themselves from property damages and/or losses:

Earthquake Insurance:

For an average annual cost of $3-$4 per $1,000 of the insured property value, California earthquake insurance protects residents and businesses from some of the repair and/or reconstruction costs caused by ground-shaking perils/earthquakes. Earthquake incidents of various magnitudes occur in California annually. This prevalence is because the whole state lies on the Pacific and North American tectonic plates and on nearly 16,000 identified faults, of which over 200 are active. The most important of these faults, the San Andreas fault, separates the Pacific Plate and the North American Plate. The California Geological Survey (CGS), which studies the state’s seismic data and provides earthquake hazard resources to increase residents’ awareness, reported that at least 7-out-of-10 Californians reside in high-risk earthquake areas. One of the state’s worst earthquakes, the Great 1906 San Francisco Earthquake occurred on April 18, 1906, and triggered fires that killed 3 thousand residents and damaged property worth $524 million (an equivalent of over $3 billion in 2023). More recently, on July 5, 2019, a 7.1 magnitude earthquake struck Ridgecrest, causing 1 death and property damage estimated at over $1 billion.

Purchasing earthquake coverage shields you from significant financial losses if your home or business becomes damaged during an earthquake. State law, however, does not mandate you (a homeowner, renter, or business property owner) to get earthquake coverage.

Earthquake insurance can be obtained from a state-ran non-profit and from private insurers. The California Earthquake Authority (CEA) is a non-profit state-regulated organization that offers earthquake insurance policies to property owners and renters and disaster preparedness resources to residents. You can only purchase earthquake policies from CEA-member insurance companies and not from the CEA directly. Private earthquake insurance can be purchased directly from the insurers.

Your earthquake insurance premium generally depends on several factors, some of which include:

• Your property’s location
• Your property’s age
• Your property’s rebuilding cost
• Your chosen coverage and its accompanying deductible
• Construction type

Typical earthquake insurance coverage is divided into three categories:

• Dwelling coverage: This protects your home and attached structures and has limits similar to your homeowners insurance policy. However, it does not cover renters or condo owners but offers special optional coverage for breakable personal items, such as glassware and china.
• Personal property coverage: This covers your personal belongings with limits typically ranging from $5,000 to $200,000.
• Loss of use (additional living expenses) coverage: This pays for your bills if you vacate your home for repairs due to earthquake damages. It typically has limits ranging from $1,500 to $100,000.

Note that your insurer is legally mandated to make a written offer to sell earthquake insurance to you annually if you already carry a homeowners policy. You have a 30-day window to accept the offer, beginning when your insurer mailed out the offer, after which it is considered declined.

Flood Insurance

With an average annual cost of $800-$1,000, flood insurance in California is an add-on type of disaster insurance that reimburses homeowners, renters, and businesses for damages/losses caused by floods within the insured property.

Flooding is the most common disaster in California. Every county in the state has recorded at least one type of flooding event in the past 25 years. Severe flooding has even caused every county to be declared as a federal disaster zone in the state at one time or another. For example, in 2017, 34 of the state’s 58 counties were declared as federal disaster zones because of flooding.

Flood events have different causes, including excessive precipitation, severe storms, and tsunamis. Dam and levee failures also result in significant flooding in the Golden State and exact a heavy toll on property owners and communities. For example, in February 1986, one of California’s most devastating flood disasters happened in central California. Several days of rainfall triggered flooding that caused 13 fatalities and damaged properties worth over $400 million (over $1 billion in 2023 money).

The most typical scenario of a flood loss is when normally dry soil near your home or business gets saturated by copious amounts of rainfall, causing the water level to rise above the surface. If there is no pump removing the excess water, the rising floodwaters level endangers your structure.

If you do not own your home - you may have to get flood insurance. Mortgage banks and other lending institutions are federally mandated to require flood coverage for a federally-backed mortgage from potential homeowners in FEMA-designated Special Flood Hazard Areas (SFHAs). You are also required to get flood coverage if you live in a high-risk flood zone, such as a flood plain, coastline, downstream of dams and levees, or near any part of the state’s 189,454 miles of rivers.

You can purchase flood insurance from the NFIP, a FEMA-administered program and from private flood insurers, through the FEMA’s Write Your Own (WYO) program. Private flood is typically purchased as supplemental coverage, in addition to the federally-sponsored plan’s $250,000 limit. Speak with California-licensed P&C insurance agents to discuss your options.

Your annual flood insurance premium usually depends on various factors, including your property's location, design, and age. Other variables are your flood zone, coverage type, and selected deductible. You can also determine your flood risk by entering your address on MyHazard, the Cal OES online hazard-risk service.

Typical NFIP flood coverage limits for a residential building and its contents are $250,000 and $100,0000 respectively while a commercial building’s coverage limit is $500,000. The same amount also applies to the commercial building’s contents. If you want more coverage - get private flood insurance.

Windstorm Insurance

Windstorm insurance compensates homeowners, renters, and commercial property owners in the event of property damage caused by destructive winds or hail. This coverage is included in the standard California property insurance and typically does not require separate purchases. Windstorm insurance protects you from all wind and wind-related damage.

Despite boasting a significant coastline on the West Coast, California is rarely directly affected by hurricanes and tropical cyclones because of the absence of storm-forming conditions: warm ocean currents and high steering winds. Unlike the deep warm water currents flowing from the Caribbean sea and through the Gulf of Mexico to the East Coast, the cold California current prevents tropical storms from forming and significantly weakens other approaching storms. Consequently, policyholders residing along the Southern California Coast are not significantly at risk of property damage from windstorms. However, as Californians we encounter excessive rainfall, strong winds, and heavy flooding events triggered by the remnants of hurricanes.

Windstorm insurance coverage comes with a windstorm or wind/hail deductible. The amount of the deductible can range between $500 and 5% of the overall insured value, so plan accordingly.

Hurricane season in California runs from June through to November in California and may carry a special deductible, an additional amount for hurricane-related damages calculated as a percentage of a home’s insured value. Traditional property insurance provides coverage for damage caused by winds or hail in low-risk wind areas. However, it excludes coverage for any property damage by a storm surge or an inland flood triggered by these hurricanes. Flooding can be covered only by flood insurance (unless it originates inside the property.

Since only the remnants of tropical cyclones or hurricanes affect the Golden State, 68.5% of Californians reside along the state’s coast. These residents are exposed to heavy rains and consequent flooding. Direct fatalities or major property damage rarely result from this hazard. For example, in 1997, Tropical Storm Nora brought heavy rainfall and flooding, which caused widespread crop damage worth $4.5 million in Imperial County. Since most windstorms, especially hurricanes, frequently cause flooding, having separate flood and sewer backup insurance in addition to your residential or commercial property insurance is highly recommended to protect you from any future disaster.

Sinkhole Insurance

Typical P&C insurance policies do not cover damage from sinkholes and other earth movements; only the physical buildings and structures are covered. You can get sinkhole coverage as an endorsement from your home insurer if you are convinced your property is at risk.

Sinkhole insurance covers damages and associated losses to homes and businesses in California resulting from ground depressions and collapses caused by water draining into the subsurface. Sinkholes typically occur where the terrain is composed of karst (limestone or dolomite). In California, sinkholes are commonly caused by groundwater pumping in the central and southern parts of the state. However, they can also occur after extended periods of extreme drought, earthquakes, or heavy rainfall. According to the U.S. Geological Survey (USGS), sinkholes have varying sizes and depths and can “vary from a few feet to hundreds of acres, and from less than 1 to more than 100 feet deep”. However, when they do occur in the Golden State, they are often too small and shallow to cause significant damage to homes and businesses.

Discuss your sinkhole coverage needs with a state-licensed insurance agent to assess your property to determine if sinkhole risk exists and provide relevant sinkhole insurance quotes.

Note that your insurer will inspect the property before issuing you a sinkhole policy. If existing sinkholes are discovered, you may have to fix and fill them in before the coverage can commence.. If you encounter a sinkhole caused by an eroded or leaking storm drain pipe on your property - report this to your local utility company so it can be fixed before it endangers your home.

Do You Need Disaster Insurance in California?

Yes, you generally need disaster insurance in California if you own a home or commercial property. Coverage from natural hazards is also required if you:

• Rent a property
• Own a condominium
• Own a vehicle

Traditional property insurance only protects you from a limited array of natural disasters, such as fires and storms. This makes you more exposed to uninsured losses or higher out-of-pocket expenses for property damage resulting from non-covered natural hazards. These coverage gaps also expose California’s 14 million housing units, of which 55.3% are owner-occupied, to uninsured property damages/losses when disasters happen. The average claim for a typical disaster in California, such as flooding, exceeds $20,000. You (the policyholder) will have to settle the cost of any repairs out of pocket if you have not bought appropriate disaster insurance. In addition, you may become homeless or be forced to bear the cost of an alternative accommodation if your property is completely damaged, requiring repair/rebuild. If the home is completely destroyed due to a flood or earthquake, your standard home insurance will not cover any of it.

By purchasing the appropriate disaster insurance policy, however, you can better protect your home, business, and personal property. You are also less at risk of incurring uninsured losses in the future if an unexpected disaster strikes.

Disaster insurance is also important because of California’s history of extreme weather events. Recent research has further shown a spike in the frequency and severity of these disastrous weather events resulting in a corresponding surge in damages/losses to lives and properties. For example, in February 1971, a San Fernando earthquake caused 65 deaths and up to $500 million in property damage. More recently in 2020, extreme natural disasters injured 253 Californians, caused 46 deaths, and destroyed properties worth over $41 million.

In addition, businesses without relevant disaster coverage in the Golden State also face one or more of the following risks if catastrophic natural disasters occur:

• Interruption of business operations/activities
• Loss of revenue
• Increased costs of running businesses
• Damage to/loss of business property

All of these risks place nearly 1 million businesses and over 15 million employees within the Golden State under the threat of insolvency and layoffs, respectively, in the future.

What Should I Do After A Natural Disaster in California?

Natural disasters in California often cause large-scale damage and destruction to residential and business properties. They usually also lead to loss of lives, evacuations, and economic activity disruptions. When a severe disaster such as flooding, wildfire, or earthquake occurs in California, your home may become uninhabitable due to significant damages or outright destruction.

These steps can increase your chances of quickly recovering from a catastrophic disaster in California:

1. Stay calm and contact your insurance company immediately, either directly or through your insurance agent, to notify them of the covered disaster and the damage/loss to your structure and personal property. Upon receipt of your complaint, your insurer will assign an insurance adjuster to inspect your property remotely, assess the extent of the reported damage, and make recommendations on your claim. You can also check for and administer first aid care for simple to moderate injuries and seek professional medical help for severe injuries sustained by you or other persons.
2. Inspect your property and the surroundings for secondary hazards caused by the disaster, such as fires, gas leaks, tottering walls/roofs/trees, and damaged electrical wiring or fallen power lines. In the case of a wildfire, check your property for smoldering spots/vegetation, especially your roof, for hidden burning embers. You may need to seek shelter or refuge outside your home if it remains unsafe to return, is significantly damaged, or is destroyed.
3. Prepare for the insurer’s inspection by organizing all information required for easy retrieval. You can assist the insurance adjuster in conducting their assessment by providing an updated home inventory with all the relevant photographs and video records of your property before the damage. You should also document the make, model, and serial numbers of major household appliances such as computers, televisions, washers, and dryers.
4. Make reasonable efforts to mitigate further damage to your property and possessions. For instance, discard all drenched personal belongings and flooded supplies that could grow moldy and constitute health risks in the case of flooding. Standard flood insurance excludes coverage for mold damage if you neglect to take reasonable action to prevent its spread. In addition, FEMA expects NFIP insureds to mitigate further mold-related damage after a flood, while earthquake policyholders can take advantage of the Emergency Repair coverage offered in all CEA policies to immediately protect their property from additional damages. You can also use a water-proof material such as PVC tarps to protect exposed personal items from further damage by rainwater, dust, ashes, and other burnt particles.
5. Obtain an independent estimate of the repair/replacement costs of your damaged buildings and other personal properties. You can also engage the services of a licensed local property contractor to get this estimate which will help you check any attempt by the insurer to underpay your claim.
6. Submit all relevant documents and records that your insurance company requires to completely process your claim, including photos, home inventory journal, videos, and receipts of purchased personal properties. Also, provide any living expense records incurred from living outside your damaged home or running your business operations from another property.

It is important to work with a California-licensed insurance agent who can help you understand the applicable disaster claim procedures and time limits to file the relevant documentation necessary to receive your claim.

Read more about How to Pay for Earthquake Insurance in California?