If you own a home in San Jose, here's something that might surprise you: your homeowners insurance doesn't cover earthquakes. Not even a little bit. And when you're living in the heart of Silicon Valley, surrounded by some of California's most active fault lines, that's not just a technicality—it's a serious gap in your financial protection.
Whether you just bought a Craftsman in Willow Glen or you're working at one of the tech giants downtown, understanding earthquake insurance isn't optional in San Jose. With the Hayward Fault lurking just to the north and scientists warning of a 72% chance of a major earthquake in the next 30 years, let's break down what you need to know about protecting your biggest investment.
Why San Jose Needs Earthquake Insurance
San Jose isn't just near earthquake country—it's in it. The city sits close to several major fault lines, including the Calaveras Fault which runs right through the eastern part of the city, and the Hayward Fault to the north. The Hayward Fault is particularly concerning because it's been quiet since 1868, and geologists know that silence doesn't mean safety. It means pressure is building.
Here's what that means for your home: when (not if) a major earthquake strikes, you could be looking at damage ranging from cracked foundations and broken chimneys to complete structural failure. And without earthquake insurance, you'll be covering those costs entirely out of pocket. For San Jose homeowners, where median home values frequently exceed $1.5 million, that's a financial risk most people simply can't afford to take.
The tech industry connection makes this even more relevant. If you work at Apple, Google, or any of the thousands of tech companies in the Valley, your equity compensation and high income might mean you've invested heavily in real estate. But that same success also means you likely own a home valued over $1 million, which comes with special considerations we'll discuss below.
Understanding the California Earthquake Authority
The California Earthquake Authority, or CEA, provides about two-thirds of all earthquake insurance policies in California. Created in 1996 after private insurers started pulling out of the earthquake insurance market, the CEA is a publicly managed, privately funded organization that works through your existing homeowners insurance company.
Here's how it works: you can't buy directly from the CEA. Instead, you purchase a CEA policy through your current homeowners insurance provider. If you have your home insured with State Farm, Farmers, or Allstate, you'd get your earthquake policy through them—they're essentially selling and servicing CEA coverage on the CEA's behalf.
As of 2025, CEA policies for single-family homes in San Jose typically cost between $800 and $2,500 annually. That's after a 6.8% rate increase that went into effect, adding an average of $70 to annual premiums. Your actual cost depends on several factors: your home's age, construction type, foundation type, roof type, proximity to fault lines, and the local soil composition.
The Deductible Reality Check
This is where earthquake insurance gets real, and it's the part that catches most people off guard. CEA earthquake insurance comes with percentage-based deductibles: 5%, 10%, 15%, 20%, or 25% of your dwelling coverage limit. Not a flat dollar amount—a percentage of your home's insured value.
Let's do the math. If your San Jose home is insured for $1.5 million and you have a 15% deductible, you're responsible for the first $225,000 of damage before your insurance pays a dime. Even with the lowest 5% deductible, that's still $75,000 out of pocket. For many homeowners, that's a sobering reality that changes how they think about earthquake insurance.
And if your home is valued over $1 million or was built before 1980 without a verified seismic retrofit, you can't even get that 5% deductible option. Your minimum deductible starts at 15%. This particularly affects San Jose homeowners, given the city's high property values and the number of older homes in established neighborhoods like Rose Garden and Naglee Park.
The good news? If you own an older home and invest in a seismic retrofit—adding foundation bolts, cripple wall bracing, and other structural improvements—you can qualify for premium discounts up to 25%. Given San Jose's mix of historic homes and high earthquake risk, retrofitting often makes both structural and financial sense.
What's Actually Covered
A standard CEA policy covers three main things. First, there's dwelling coverage (Coverage A), which pays to repair or rebuild your home's structure. Second, personal property coverage (Coverage C) protects your belongings—furniture, electronics, clothes, and everything else inside your home. Personal property limits start at $5,000 and go up to $25,000, though you can increase this if needed.
Third, there's additional living expenses coverage, also called loss of use. If an earthquake makes your home unlivable, this pays for temporary housing, meals, and other living costs while your home is being repaired. For San Jose's expensive rental market, this coverage is particularly valuable—you could easily spend $4,000 to $6,000 a month on a comparable rental while your home is being fixed.
CEA now offers a Homeowners Choice option that lets you customize your coverage. You can choose separate deductibles for your dwelling and personal property, or even decline certain coverages if you want to lower your premium. For tech workers with valuable electronics and equipment, you might want to prioritize personal property coverage. For others, dwelling coverage alone might be sufficient.
Beyond the CEA: Private Market Options
While the CEA dominates California's earthquake insurance market, you do have alternatives. Private insurers like GeoVera, Amica, and some regional carriers offer standalone earthquake policies that can sometimes provide better coverage or lower deductibles than CEA policies.
Private earthquake insurance often comes with more flexibility in coverage limits, deductible options, and policy terms. Some carriers offer percentage deductibles as low as 5% without the restrictions that apply to CEA policies. However, they may also be more expensive or have stricter underwriting requirements, especially for older homes or those in high-risk zones.
It's worth getting quotes from both CEA and private insurers to compare your options. Work with an independent insurance agent who can shop multiple carriers and help you understand the trade-offs between premium costs, deductibles, and coverage limits.
Making the Decision: Is It Worth It?
This is the question every San Jose homeowner wrestles with. You're paying $800 to $2,500 a year for coverage that comes with a deductible so high that only catastrophic damage would trigger a payout. So is earthquake insurance actually worth it?
The honest answer depends on your financial situation and risk tolerance. If you have enough savings to rebuild your home entirely out of pocket, you might choose to self-insure. But for most people, that's not realistic. Even with a six-figure emergency fund, a major earthquake could exceed your savings and leave you with a damaged or destroyed home and a mortgage you still have to pay.
Think of earthquake insurance as catastrophic coverage, not comprehensive coverage. It won't pay for minor cracks or cosmetic damage. But if the Hayward Fault produces the earthquake scientists are expecting, and your home suffers serious structural damage, that insurance policy could be the difference between rebuilding your life and facing financial ruin.
Getting Started with Earthquake Insurance
If you've decided earthquake insurance makes sense for your situation, start by contacting your current homeowners insurance company. Ask them about CEA coverage options and get a detailed quote that shows premiums for different deductible levels. Use the CEA's online premium calculator to estimate costs before you call.
Next, talk to an independent insurance agent about private market options. Get at least two or three quotes so you can compare coverage, deductibles, and costs. Don't just look at the premium—pay close attention to what's covered, what's excluded, and how claims are handled.
If you own an older home, get an evaluation for seismic retrofitting. Even if you don't buy earthquake insurance right away, knowing what improvements your home needs gives you valuable information. And if you do retrofit, you'll qualify for those premium discounts and have a safer home regardless of your insurance coverage.
Living in San Jose means accepting earthquake risk as part of life. But it doesn't mean being unprepared. Whether you choose CEA coverage, a private policy, or decide to self-insure, the important thing is making an informed decision based on your financial situation and the real risks your home faces. Start by getting quotes, understanding your options, and choosing the protection that gives you peace of mind in earthquake country.
