We as agents hear a laundry list of excuses for not purchasing earthquake insurance: I don’t live in Los Angeles so I don’t need it. It is too expensive, the deductible’s too high or I just can’t afford it. Let me tell you, you do need it, it is not too expensive and you can’t afford NOT to have it!
Earthquake Damage from Northridge Quake 1994
I have experienced two major earthquakes here in California in my almost 30 years, the Landers earthquake in 1992 and the Northridge earthquake in 1994. Although both earthquakes were more than 100 miles from my home in Carlsbad, the shaking was severe and some items, including a small TV, were knocked to the ground. The damages from the Northridge earthquake alone exceeded $20 billion. Homes were destroyed, freeways collapsed, and more than a dozen people were killed in an apartment complex collapse. The Northridge Quake bankrupted many insurance companies in California which led to the creation of the California Earthquake Authority, a state run earthquake insurance provider.
The San Andreas Fault, which runs the length of California, gets the most attention because it has been the most active. However, the Rose Canyon Fault which runs through the heart of San Diego County has not produced a major earthquake in centuries but it is considered active because there is a history of earthquakes in the last 11,000 years. Nonetheless, the lack of recent earthquake activity in our region has created a false sense of immunity for the residents of San Diego County. If an earthquake were to occur along the Rose Canyon Fault, our infrastructure could be destroyed and it could take months or even years to rebuild.
Who Said There Are No Earthquake Faults in San Diego?
Every insurance company that sells residential property insurance (homeowners insurance) is required by law to offer its insured’s earthquake insurance. Many carriers in California use the California Earthquake Authority (CEA) for earthquake insurance but if your insurance company does not use the CEA program, you may purchase earthquake insurance directly from your insurance company or from another company that offers stand alone earthquake insurance. The basic earthquake policy in California includes dwelling coverage equal to the dwelling amount on your home insurance, $5,000 in personal property coverage and $1,500 in additional living expense with a 15% deductible. Below is a premium breakdown for basic earthquake insurance for a 2-story home that is approximately 1700 square feet built after 1991 using zip codes from San Diego, Los Angeles and San Francisco.
Earthquake Activity In the Last Week!
Coverage (All Zip Codes)
Dwelling Amount $300,000
Personal Property $5,000
Loss of Use $1,500
Deductible (15%) $45,000
(Damages would need to exceed $45,000 before earthquake coverage would apply)
San Diego $168
(That is only $14/month for basic coverage)
Los Angeles $516
San Francisco $939
Of course the illustration above is only for a basic earthquake policy but more coverage is available for additional premium. The CEA also announced a rate reduction for many homeowners effective January 1, 2012.
For more information about California earthquake insurance, give Ken May Insurance Services a call at 888-724-2086.