Californians on shaky ground with earthquake insurance
With Californians still getting rattled by the aftershocks of Thursday’s powerful earthquake, state authorities are hoping the Independence Day trembler will serve as a wakeup call to residents to get ready for the next one. And there will be a next one — maybe even the big one.
There’s a 99% chance that a strong earthquake with a magnitude of 6.7 or greater will hit California in the next 30 years, according to experts. And yet while a majority of California residents live within 30 miles of an active fault line, only about 13% of the state’s residents have insurance to protect them from the potential physical shocks and financial aftermath.
If Thursday’s quake had occurred under a densely populated area, it’s “likely that California would be looking at many more injuries and damages in the billions of dollars,” Glenn Pomeroy, CEO of the California Earthquake Authority, or CEA, said in a statement. “This event is an important reminder that all of California is earthquake country.”
The CEA, a not-for-profit, privately funded, publicly managed organization that provides residential earthquake insurance, has about 2,000 policyholders in the areas affected by this week’s quake, according to Pomeroy.
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“People in California don’t have to purchase earthquake insurance, generally speaking, when they are buying a home. It’s not a requirement like if you’re in a flood zone,” said Janet Ruiz, a spokesperson for the Insurance Information Institute, a New York-based industry association. Lenders require homeowners to purchase fire insurance when they sign up for a mortgage, but quake coverage is not part of a basic homeowners policy, she said.
“Drop, cover and hold on”
When Californians receive insurance renewals, they include a notification telling them they don’t have earthquake insurance on their standard policies, according to Ruiz. “It’s something for people to consider. FEMA payouts are not going to cover it,” she added of the Federal Emergency Management Agency, the agency created to help respond to domestic disasters.
While the quake safety mantra from officials as to what to do when the ground starts shaking is “drop, cover and hold on,” other steps to prepare for surviving and recovering from damaging quakes include retrofitting homes built before 1980 and the advent of more quake-conscious building codes.
“In an earthquake, older homes will shake off their foundation,” said Ruiz, who noted that the CEA offers grants to help finance fixes through its “Earthquake Brace and Bolt” program.
The CEA was created by California lawmakers after the 1994 Northridge Earthquake killed 57 people and injured more than 9,000. The quake, centered in the San Fernando Valley, caused an estimated $20 billion in damage that included fires, landslides, collapsed buildings and freeway overpasses and snapped water and gas lines.
In addition to the CEA, several companies sell earthquake insurance, with one recently introduced product that pays out claims to those living in an impacted area, even if there’s no damage. “The trigger is the actual earthquake but you don’t have to have damage per se,” said Ruiz. “You might have to evacuate, so there can be actual costs even if you don’t have damage.”
California is not alone in being a quake-prone state. States with quake activity in recent years include Alaska, Hawaii, Idaho, Kansas, Montana, Nevada, Oklahoma and Missouri, Washington and Utah, according to the U.S.Geological Survey.
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