Earthquake Insurance
A separate policy or endorsement covering earthquake damage, which standard property policies exclude, typically written with a high percentage-based deductible, commonly 10 to 20 percent of the dwelling's insured value, rather than a flat dollar amount.
Why it matters
The percentage-based deductible catches a lot of property owners off guard, since it's much larger in real dollars than the flat deductible they're used to on their standard policy, and it applies before any payout starts.
On a real project
A homeowner with a $400,000 dwelling and a 15 percent earthquake deductible has to absorb the first $60,000 of damage themselves before the policy pays anything at all, a very different math than their standard policy's flat $1,000 deductible.
Who this matters most to
A Builder's Risk Underwriter prices earthquake coverage using seismic risk data specific to the property's location, since the risk varies enormously by region even within the same state.
Where this goes wrong
A homeowner buys earthquake coverage assuming it works like their standard policy's flat deductible, then discovers after a moderate quake that their earthquake policy carries a 10 percent deductible on a $550,000 dwelling, $55,000, leaving a payout far smaller than expected once the deductible is applied.