Earthquake Insurance: What Does It Cover, How Much Does It Cost, and What Should You Watch Out For?

Why Is Earthquake Insurance Important?

Greece is a country with significant seismic activity. A strong earthquake can cause anything from minor cracks in walls to serious damage to a building’s structural framework, destruction of installations, or damage to the contents of a home.

The cost of repairs can be substantial, particularly when extensive construction work is required or when the property cannot be used for an extended period.

Earthquake insurance can help protect homeowners financially by covering eligible damage in accordance with the policy terms. It does not eliminate the risk, but it can help reduce the financial consequences of a catastrophic event.

What Does Earthquake Insurance Typically Cover?

Earthquake coverage may be offered as part of a home insurance policy or as an additional coverage option. The exact scope of protection varies by insurer and policy.

1. Damage to the Building

Depending on the policy terms, covered damage may include:

• Cracks and damage to walls, ceilings, and floors, provided they fall within the policy’s definition of covered damage.
• Damage to the building’s structural elements.
• Damage to fixed installations and built-in features.
• Destruction or serious damage to parts of the property that require repair or reconstruction.

Not every crack or cosmetic defect is necessarily covered. A technical assessment may be required to establish whether the damage was caused by the earthquake and whether it meets the policy’s conditions.

2. Damage to Contents

If contents are also insured, coverage may extend to damage to movable belongings, such as:

• Furniture and household equipment.
• Electrical appliances and electronic devices.
• Other personal belongings included in the insurance coverage.

Insuring the building does not automatically mean that all the items inside it are insured as well. Check whether contents are included in the policy and what limits apply.

3. Additional Damage Related to an Earthquake

Some policies may provide coverage for specific consequential damage. However, you should not assume that every type of damage occurring after an earthquake will be covered.

For example, a fire, water leak, or damage to a neighboring property may be treated differently depending on the cause, the relevant coverage, and the policy’s specific terms.

What Is the Difference Between Building and Contents Insurance?

Before choosing a policy, it is important to understand exactly what you are insuring.

Type of coverage

What it covers

Building insurance

The property itself and the elements included in the policy’s definition of the building.

Contents insurance

Furniture, appliances, and other insured movable belongings.

Combined insurance

Both the building and its contents, with separate or shared limits depending on the policy.

Example: An earthquake damages walls and built-in wardrobes while also destroying a television and a computer.

Compensation for damage to the property is assessed under the building coverage, while damage to the appliances is assessed under the contents coverage, provided that this coverage is included and the damage is eligible for compensation.

How Much Does Earthquake Insurance Cost?

There is no single price for all homes. The premium depends on the property’s characteristics, the insured value, and the terms of the coverage.

The main factors include:

The property’s location: The geographical area and its seismic risk characteristics may affect pricing.

The building’s age and characteristics: The age, construction method, condition, and other technical features may be taken into account by the insurer.

The insured value: A higher insured amount may result in a higher premium.

The deductible: The deductible is the amount or percentage of a loss that the policyholder must bear, as specified in the policy. A higher deductible may be associated with a lower premium, but it also means greater out-of-pocket expenses if damage occurs.

The scope of coverage: Insuring only the building may cost less or more than a policy that also includes contents and additional coverage, depending on the specific terms.

To evaluate a quote properly, do not look only at the annual premium. Also compare how much you would have to pay out of pocket if a loss occurred.

What Is a Deductible in Earthquake Insurance?

The deductible is one of the most important details to check before signing an insurance policy.

Depending on the policy, it may be calculated as a percentage of the insured amount, a percentage of the loss, or in another way specified in the terms.

Illustrative example: If damage is assessed at €20,000 and the applicable deductible is 10% of the covered loss, the deductible would amount to €2,000. Assuming no other restrictions apply, the compensation could be €18,000.

This is a hypothetical example. The actual calculation depends on the wording of the policy, the coverage limits, and how the deductible is applied.

How Should You Choose the Right Insured Value?

A common mistake is assuming that the insured value of a building must equal the property’s market value.

For building insurance, the insured value may be based on the reconstruction cost—the amount required to rebuild the property, as defined by the policy.

Market value may be influenced by factors such as location and land value, which do not necessarily correspond to construction costs.

Before setting the insured amount, consider:

• The property’s square footage and characteristics.
• The quality of construction and fixed installations.
• How the insurer calculates the insured value.
• Any risk of underinsurance or overinsurance and the consequences.
• The valuation and compensation method specified in the policy.

Choosing an appropriate insured value is important because insufficient coverage may not be enough to restore the property fully after serious damage.

What Should Homeowners, Tenants, and Landlords Consider?

If You Own and Live in the Property

Consider whether you need coverage for both the building and its contents. Also check whether storage areas, auxiliary spaces, or other installations are included.

If You Own a Rental Property

Protecting the building can be important even if you do not live there. If the property is used for long-term or short-term rentals, inform the insurer about its actual use and check whether a specialized policy or additional coverage is required.

If You Are a Tenant

The landlord’s insurance does not necessarily cover your personal belongings. You may wish to consider contents insurance, depending on your needs and the terms of the available policies.

Which Exclusions and Limitations Should You Watch Out For?

Having earthquake coverage does not mean that every loss will be compensated without conditions. Read the general and specific policy terms carefully, paying particular attention to the following:

• Pre-existing damage: Damage that existed before the policy began may be excluded.
• Maintenance and wear and tear: Normal deterioration, inadequate maintenance, or certain construction defects may be treated differently from direct earthquake damage.
• Deductibles and coverage limits: These affect the final amount that may be paid.
• Conditions for coverage to begin: Check when protection takes effect and whether a waiting period or other restriction applies.
• Damage assessment procedures: Find out which documents are required and how compensation is determined.

Do not rely solely on a brief description of the policy. The full terms determine what is covered and under which conditions.

What Should You Do If an Earthquake Damages Your Property?

Taking the right steps can help protect people’s safety and ensure that an insurance claim is handled properly.

1. Put safety first. Stay away from dangerous areas and follow the instructions of the relevant authorities. Do not enter a building that appears to have sustained serious damage until it has been deemed safe.
2. Contact your insurer. Report the damage as soon as possible, observing the deadlines specified in your policy.
3. Document the damage, if it is safe to do so. Photographs, videos, and a list of damaged items can help support your claim.
4. Keep relevant receipts and records. Retain receipts for necessary work, temporary protective measures, and other related expenses.
5. Avoid non-urgent repairs before documenting the damage. Where safe and practical, consult your insurer before undertaking work that could make the damage more difficult to assess. Necessary measures to prevent further damage should not be delayed when a risk exists.

If there are signs of structural damage, seek an assessment by a qualified engineer and follow the authorities’ instructions.

Are There Tax Benefits for Insured Properties?

Home insurance may, under certain conditions, be associated with tax relief provided for under the applicable legislation. However, eligibility requirements, rates, supporting documents, and deadlines may change.

Furthermore, the existence of a tax benefit does not, by itself, expand the coverage provided by the insurance policy.

Before making a decision based on a potential tax benefit, confirm the rules applicable to the relevant tax year with the Independent Authority for Public Revenue (AADE) or your accountant.

Earthquake Insurance: A Practical Checklist Before You Choose

Before selecting a policy, make sure you can answer the following questions:

• Is the building insured, the contents, or both?
• What is the insured value, and how was it calculated?
• What deductible applies in the event of an earthquake?
• Are there coverage limits or specific exclusions?
• Which types of damage are considered covered, and what documentation is required?
• When does coverage begin, and what conditions apply?
• Is the policy suitable for the property’s use, particularly if it is rented out?

Conclusion

Earthquake insurance can be an important part of protecting your property, particularly in a seismically active country such as Greece. Choosing the right policy depends not only on the premium but also on the insured value, deductible, scope of coverage, and exclusions.

Before making a decision, compare more than one quote and ask for clear answers about how compensation would be calculated in the event of serious damage. An insurance policy provides real value when it meets your needs and you understand the limits of the protection it offers in advance.