LOS ANGELES (CBS) — Less than 12 percent of California’s homeowners are estimated to have purchased earthquake insurance, despite the risk of earthquakes and tsunamis to the state.

“The potential cost of earthquakes is growing because of development in seismically active areas and the vulnerability of older buildings which may not have been built or upgraded to current building codes,” said Candysse Miller, executive director of the Insurance Information Network of California.

Earthquakes are not covered under standard homeowners or business insurance police and is a supplemental policy. In California, homeowners can also secure coverage from the California Earthquake Authority, a privately funded, publicly managed organization.

Flood damage from a tsunami also would typically be covered under a flood insurance policy rather than a standard homeowner insurance policy, Miller said. Flood policies are available from the federal government’s National Flood Insurance Program and some private insurance companies, and can generally be purchased from the same agent or broker who provides homeowners or renters insurance.

The U.S. mainland has not been shaken by a major quake since the magnitude-6.7 Northridge earthquake in 1994.

According to insured losses, the Northridge quake and the 1989 magnitude-6.9 Loma Prieta quake were the two most costly earthquakes in U.S. history. The Northridge earthquake caused an estimated $19 billion to $29 billion in insured losses,by 2008 dollars. The Loma Prieta quake cost a little over $12 billion in insured losses, the IINC reported.

(©2011 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

Comments (5)
  1. Judy says:

    yes – because the insurance for Earthquakes does not pay 1 dime until you have more than 15% of your homes rebuilding cost damage – Let’s do the math – $300k house must sustain more than $45,000 worth of damage (which is coming out of your own pocket) before the insurance company will pay 1 cent. The only way it becomes worthwhile will be to basically lose your home.

  2. reid says:

    damn.. i didn’t know that! Thanks for the heads up!

    1. RGS says:

      OK, folks, READ your basic homeowner’s policy, if you have a home with any equity in it in California. Earthquakes aren’t covered, and, yes, EQ policies have a 10 or 15% deductible. If the insurers wrote policies with a lower deductible, they’d be completely unaffordable.

      While you’re looking at your basic policy, you also should look at what’s considered a “flood”, and consider getting FLOOD insurance, even if you live on top of a hill, in a near-desert. If any rain falls from the sky, hits the ground, even an inch from your house, and THEN flows into your house and causes damage, that’s “flood damage” under most basic owner’s policies, and is NOT covered unless you have a flood policy.

  3. Lazy Larry says:

    EQ insurance is an expensive item. The two previous posts talk about 10 to 15% deductibles. Mine is 20%, so I would love to see their policies. Sure the deductible and premiums are high, yet I think that I will come out ahead after the Big One demolishes the building. If Jenny (previous post) takes half of the money saved and invested in structurally reinforce the building, she may come out ahead with some money to spare. Yet an earthquake may still demolish the upgraded building. In any case, the insurance company will pay the other 85% of the rebuilding costs. If the insurance doesn’t, you will need to foot the bill. Don’t believe Uncle Sam, bank, or anyone else will give you a loan to build that house on an earthquake fault.

  4. happy woman says:

    I’m amazed, I have to admit. Seldom do I come across a blog that’s equally educative and engaging, and let me tell you, you’ve hit the nail on the head. The problem is an issue that too few men and women are speaking intelligently about. Now i’m very happy I came across this during my hunt for something concerning this.

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