Who Pays for Earthquake Damage?

john's picture

Earthquake risk to populations in California and around the world is growing exponentially,  even as the insurance and financial industries are less and less able to insure the loss. 

In California, only about 750,000 - 800,000 homeowners have earthquake insurance, a rate of coverage of about 8-10%.  And the deductible is high -- typically 15%, which can mean tens of thousands, if not hundreds of thousands of dollars  in damage that the homeowner must pay before the policy coverage begins.  Coverage rates of commercial buildings are not significantly greater, only about 15% to 20% of such buildings are covered by any form of earthquake insurance. 

The overall financial risk of great catastrophes is increasing exponentially with time as more and more citizens move into hazardous areas.  The recent turmoil in the financial markets does not lend confidence that this growing financial problem can be solved with insurance, reinsurance, or even risk securitization through alternative risk transfer mechanisms.  Major bond insurance companies have encountered serious financial headwinds, and rating agencies are under attack for poor performance.  As a result of these developments, as well as natural catastrophes such as the Northridge earthquake and hurricane Katrina, there is less and less confidence that risk estimation and risk management by the insurance and financial communities is reliable. 

For these reasons, the burden of natural catastrophe risk management in the fugure will increasingly fall on the individual property owner or homeowner.  As a result, there is a growing need for new forms of risk management targeted at individuals around the world.  The world wide web is uniquely suited to delivery of individualized services such as Personal Risk Management, similar to personalized services such as search (Google), book sales (Amazon), and sales of personal items or small lots of items (eBay).  Open Hazards will provide the information and tools to allow individuals world wide to understand and manage their exposure to earthquake risk.

Who pays for earthquake damage?  You do.


umam12's picture

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umam12's picture
Claire Miller's picture

In the natural disasters, the people face the lots of complications like financial related etc. The number of people insures their houses and the life and after loose the get some money against. That buying research papers article is quite informative and useful for the people of California to protect from big lose in an earthquake.

jordanss123's picture

yeezy350find Thanks for sharing such a valuable informatio

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