Earthquake Insurance and You
In an article published today on the web site InsuranceRate.com, Lucas Eichman discusses earthquake insurance in California. He quotes Glenn Pomeroy, CEO of the California Earthquake Authority: "Lets say the 7.2 (Baja earthquake) that happened on Sunday happened under Los Angeles. We would see massive destruction. Homes destroyed. Infrastructure badly damaged."
According to information provided by Eichman, only about 12 percent of homeowners in California carry earthquake insurance. The California Earthquake Authority was established following the 1994 Magnitude 6.7 Northridge earthquake as a public-private partnership, after many insurance companies faced insolvency due to inadequate capital reserves.
The article makes clear that most residential insurance policies do not cover damage due to earthquakes. In addition, Pete Moraga, speaking for the insurance industry, points out that FEMA grants are usually capped at about $30,000, a small fraction of the replacement value of many homes in California.
Why do most homeowners in California decline to purchase earthquake insurance? Part of the answer is surely cost. Earthquake policies typically have a 15% deductible. For a structure valued at $400,000, the first $60,000 in damage would not be covered by the policy. Coverage in seismically active areas can cost thousands of dollars per year.
How do you know whether your home might suffer extensive damage in an earthquake? What might the loss be? Answers to questions such as these can be found by looking under the "Tools" tab on this web site. The Home Damage Estimator provides some answers. The homeowner can place the green house on the location of her own home, then move the red earthquake icon to a point near the house. After describing the house and its structure, and entering the magnitude of the earthquake, a damage factor and estimated dollar loss will be computed. The calculation can be repeated any number of times to develop a sense of how large the loss is likely to be.
Source. Lucas Eichman at
http://www.insurancerate.com/cost-of-earthquake-insurance-deters-homeowners.php
About OpenHazards Bloggers
Steven Ward is a Research Geophysicist at
the Institute of Geophysics and Planetary Physics, UC Santa Cruz. He specializes in the quantification and simulation of
natural hazards. Read Steve's blog.
John Rundle is a Distinguished Professor of Physics
and Geology at UC Davis and
the Executive Director of the APEC Collaboration for Earthquake Simulations. He
chaired the Board of Advisors for the Southern California Earthquake Center from 1994 to 1996. Read John's blog.