Why The Recent Spike In Demand For Earthquake Insurance Policies?

CA WA Earthquake Insurance

When we think of Earthquakes, we commonly think of California Seismic Activity; it is estimated that only 17% of California Homeowners are insured against the peril of Earthquake.  Most recently, there has been an increased demand for Earthquake Insurance; the requests are more heavily concentrated in Southern California, although there has been a slight increase of quotation requests in Northern California as well as in the State of Washington.

Earthquake Insurance Coverage doesn’t come cheap; due to the unpredictability of the risk and the lack of readily available statistics, consumers are not sure whether an insurance policy will be helpful. Earthquake Insurance policies come with a percentage of coverage based deductible; thus, earthquake insurance is not designed to reimburse the cost of light damage to a home.

Following a strong earthquake which rocked parts of Southern California in 1994 causing $12.5 Billion in damage, the earthquake insurance coverage was drastically changed. Insurance carriers who used to underwrite earthquake insurance ceased to do so; the California Earthquake Authority (CEA) was created on a shared basis amongst carriers who chose to join a collective partnership.   It is no secret that the California Department of Insurance requires carriers to offer Earthquake Insurance to customers whose homes are covered by Fire Insurance; this changed the whole dynamic of the property insurance industry.

The following are just a few excuses that homeowners use to self justify not buying earthquake insurance:

  1. My home survived the last earthquake without any damage at all.
  2. Our home is retrofitted and bolted to the foundation.
  3. The Federal Government (FEMA) will give us money to rebuild.
  4. If the home is damaged, I’ll walk away from the house and mortgage.

None of the above excuses are backed by any known intelligence by the experts; each individual earthquake has a unique motion and strength. Sometimes homes are damaged on one side of a street but not on the other.

Bolting and retrofitting homes works well for single story homes; however, in the event of a catastrophic tremor, there is little that can help a home as it is violently shaken. The Government has been tasked with endless disasters and the Government expects people to purchase their own security instruments if available rather than take Federal loans which will need to be repaid in addition to any outstanding loans on the home prior to the earthquake.

For most families, their home is their largest investment and also their greatest savings vehicle. It would make sense to insure such an important element in life rather than being left in a heavily indebted state and losing hard earned investment dollars. Insurance payouts for repairs are not taxable and in most cases, will help the family return to at least close to their financial condition prior to the loss.

Homes are easy to insure and FREE Earthquake Insurance quotes are available online on a self service basis. For further information, an independent representative can answer questions and offer advice for your specific scenario.