If you live in the Bay Area, you have most likely come to grips with earthquakes being part of your daily life. You know that there are small quakes on nearly a daily basis and you’ve gotten used to the subtle shaking that some compare to the vibration of someone running up the stairs in the house. In the past 12 days, for example, there have been 10 earthquakes from Napa to San Jose. They ranged from 1.5 magnitude to 2.5 magnitude. Most people probably didn’t even feel them, but they happened. Despite the frequency of earthquakes, or maybe because of them, people tend to accept earthquakes as a normal part of life and don’t take the potential of major destruction as seriously as they should. As a result, they don’t get earthquake insurance. Many don’t see the need or think the odds are low that they will be affected, and for many they think that the policy will cost too much.

According to an article in Market Watch, “the U.S. Geological Survey predicts that there is a 68% chance of a 7.0 magnitude earthquake in the Bay Area in the next 30 years, either along the San Andreas fault, which ruptured in 1989 and 1906, or the Hayward or Calaveras faults. The chance of a 6.7 magnitude quake over the next 30 years is now predicted at 99%, the USGS says. In addition, the USGS estimates that there’s a 75% chance that a 7.0 magnitude quake will strike Southern California within the next 30 years.”   

Despite these high chances of a major earthquake, according to an article on KQED, only 9 % of California homeowners now have earthquake insurance. This is down from about 33 %, where it was about twenty years ago. As engineers specializing in earthquake retrofitting, we spend our days steeped in the potential for major destruction and working to minimize property damage when a large one occurs. If you have a home or business that needs soft story mitigation, call us today.

We do our best to mitigate the risk of major damage. People have fire insurance and flood insurance, so why not earthquake insurance? Especially if you live in the Bay Area, you should have earthquake insurance. We often meet with homeowners who don’t know a lot about earthquake insurance, and so we will dedicate this week’s article to answering common questions about this valuable coverage.

Common Questions about Earthquake Insurance

Is earthquake insurance included in my homeowners’ coverage?

No. Generally, homeowners policies do not include earthquake insurance.

Did things change at some point?

Yes, after the 1994 Northridge Quake insurance companies increased their rates up to ten times the previous rates. Companies were caught off guard by the scale of the damage and the number and size of the claims. They paid losses amounting to $40 billion property damage. Twenty billion of this was for residential damages. As a result, the insurance industry severely restricted the number of policies it offered and increased the prices.

What is a mini policy?

Starting in the 1980,s insurance companies were required by law to offer earthquake policies, but after taking a substantial hit after the 1989, Loma Prieta and 1994 Northridge quakes, many companies restricted the number of policies they offered and rates went up for a few decades. A mini policy is a policy that covers basic housing needs and excludes extras such as patios and swimming pools. It fulfills legal requirements that say an insurer must offer earthquake coverage.

What is the average premium?

Statewide the average for premium is about $800, but as with all homeowners insurance, it depends on the policy, the value of the dwelling, and the additional items that are covered.

What does Earthquake Insurance Cover?

The answer to this question depends on the particular policy you opt for. The three main areas that can be covered are the dwelling, the personal possessions in the home, and additional living expenses to keep a roof over your head while your home is being repaired.

Check back for part two of our article on frequently asked questions about earthquake insurance. We’ll cover how retrofitting your home and performing soft story mitigation can lower your premiums and more! Call us today to schedule an inspection of your home.