Earthquake Coverage: How Multi-Risk Insurance Protects Your Home in the Event of an Earthquake

On the afternoon of February 17, 2025, disbelief, mixed with some apprehension, gripped the residents of the Lisbon metropolitan area: the ground shook, and it was no ordinary tremor.

Although Portugal—and, more specifically, Lisbon—is located in an area of moderate seismic activity, this earthquake, which measured 4.7 on the Richter scale, has raised fears that the devastating earthquake of 1755 might recur in the near future.

There are no certainties, but seismologists and structural engineers warn that, given the lack of preparedness of Portuguese residential buildings to withstand an earthquake and the virtually nonexistent public safety measures, a strong earthquake (6 to 6.9 on the Richter scale) could cause significant human and material losses.

If we can’t prevent an earthquake or stop our homes from being damaged, we can—and should—at least ensure that, after the earthquake, we have financial assistance to rebuild our lives. How? By purchasing a multi-risk insurance policy.

What Is Multi-Risk Insurance and How Does It Work?

As the name suggests, the main purpose of comprehensive home insurance is to protect your home in the event of damage caused by disasters such as fires, theft, electrical problems, floods, or earthquakes.

To this end, the Multi-Risk Insurance It offers a range of coverage options that will not only protect your home from the damage caused by these disasters, but can also insure the contents of your home, ultimately providing you with financial peace of mind that you would not otherwise have.

With regard to the insured amount, it is recommended that it be equal to the total reconstruction cost of the property; whenever renovation work or structural alterations are carried out, the insured amount should be increased so that the building is covered at 100%. In the event of a claim, the insurer will only pay for losses that fall within the insured amount.

For example, let’s imagine that, after an earthquake, rebuilding your home will cost 150,000 euros and you have a Multi-Risk Insurance policy with an insured amount of around 75,000 euros. In this situation, the insurance company will be responsible for only 50% of the assessed damages, while the remaining 50% will be your responsibility.

But keep in mind that the losses for which the insurance company will be liable are directly linked to the coverage you purchase, that is, if your home is flooded and your policy does not include flood damage coverage, the insurer is not obligated to cover the damage to the home and its contents.

Coverage for Seismic Events under Multi-Risk Insurance

As we mentioned earlier, the purpose of Multi-Risk Insurance is to protect our home and personal property in the event of various disasters: fires, floods, storms, earthquakes, etc.

In the case of earthquakes, the APS (Portuguese Association of Insurers) has divided Portugal into five seismic risk zones, with Zone A corresponding to the area of highest risk and the highest insurance premium, while Zone E corresponds to the area of lowest risk and, consequently, the lowest premium. As for zones B, C, and D, the rates are generally similar.

For example, the city of Faro is in Zone A, while Lisbon is in Zone B and Porto is in Zone D.

In addition to geographic area, the APS also classified the buildings based on their age and type of construction as follows: built before 1960, between 1960 and 1985, and after 1985.

When we cross-reference the seismic risk zone with the property's construction date, we determine the premium that will apply to the insured property.

However, to determine the amount the insured will have to pay for a multi-risk insurance policy that includes coverage for seismic events, we must also take into account the insured amount and the deductible (the amount the insured is responsible for) selected.

With regard to the insured amount, the higher the insured amount, the higher the premium to be paid; as for deductibles, the standard stipulates that a rate of 5% is applied to the value of losses calculated after an earthquake, although there are insurers where this rate may rise to 10%.

My house was just damaged by an earthquake. What do I do now?

Once you have ensured your safety and that of your family, the first thing to do is report the incident to your insurance company, providing details of the date and time the earthquake occurred and the visible damage.

In addition, try to gather evidence of the damage, such as photographs, videos, a fire department report (if applicable), etc.

If you need to make an urgent repair to the property, we recommend that you keep the receipts so you can submit them to your insurance company later.

Why is it important to insure the contents of a property in the event of an earthquake?

We have already emphasized the importance of ensuring that the insured amount is equal to the property’s reconstruction value. In the case of household contents, the value should roughly correspond to the purchase price, at the time, of appliances, furniture, and personal items (clothing, computers, cell phones, etc.).

Compared to the value of the property, the contents of the house may seem insignificant, but if we do the math, replacing all the belongings lost or damaged in an earthquake is quite expensive—just consider that a mid-range computer can cost up to 1,000 euros, and the price of kitchen appliances can reach 20,000 euros.

Thus, by layering the filling on a Multi-Risk Insurance, you will be ensuring complete protection for all your assets in the event of an earthquake and, at the same time, protecting your portfolio.

Why should I have insurance that covers earthquakes?

Portugal is in a sensitive location from a tectonic standpoint, as it lies at the junction of the Eurasian Plate and the African Plate.

Seismic events occur frequently, and although the country has not experienced a major earthquake since the devastating one that struck Terceira Island on January 1, 1980, seismologists say that a major earthquake is highly likely to occur in the near future.

As we have already seen, the risk is not the same throughout the country, but the very division of the territory into risk zones is a matter of debate, and no one knows what the potential destructive impact of an earthquake might be on their home; therefore, rather than having to deal with the consequences, it is better to take preventive measures by purchasing a comprehensive insurance policy that includes coverage for seismic events.

However, it is not enough to simply insure the value of the property’s reconstruction to provide you and your family with the peace of mind and comfort you need after an earthquake; it is also important to add coverage for the contents of your home to ensure that any lost personal property will be replaced.

It is worth noting that, in the event of an earthquake, only 16% of Portuguese homes (according to APS data) are protected by earthquake insurance, which runs counter to all recommendations from DECO and seismology experts.

This means that, in the worst-case scenario, thousands of families across the country, from north to south, will be left without their permanent homes and their personal belongings, and will also be financially responsible for replacing them, since all losses resulting from an earthquake will have to be borne by them, unlike those who have this type of insurance.

How EXS Seguros Can Help

Make comparisons among the many Multi-Risk Insurance with Earthquake Coverage Finding the right product on the Portuguese market can be a grueling and very confusing task, especially if you don't have the necessary knowledge in this area.

To ensure that, after all this effort, you don’t end up with an expensive insurance policy that doesn’t meet your actual needs, seek the help of experienced professionals like EXS Seguros, who will provide you with personalized consulting services throughout the entire underwriting process, tailored to your expectations.

Among other things, EXS Seguros will help you understand which situations are excluded from coverage, the level of flexibility and adaptability the insurance offers you, and the additional benefits it includes.

In addition, EXS Seguros will compare different insurance companies and policies, ensuring that you get not only the best earthquake coverage on the market, but also the one that offers the best value for money.

Conclusion

You may not know when the next earthquake will shake the foundations of your home—and, by extension, your life—but with a Multi-Risk Insurance policy that includes earthquake coverage, you can be sure your property will be protected in the event of a disaster.

Given the high risk of earthquakes to which the country is exposed and the vulnerability and age of most of Portugal’s buildings, it is better to be safe than sorry and seek professional assistance from EXS Seguros right away.

At EXS, we offer the best multi-risk insurance options, with comprehensive coverage that protects both your property and its contents in the event of an earthquake. Check out our solutions and ensure complete protection for your home.