No doubt after last earthquake near Napa, you’ve purchased or restocked your emergency kits, and rehearsed with friends and family what the plan is if another big one hits. And then, there’s earthquake insurance, or probably not. Most Californians if they’ve looked into it have already determined earthquake insurance is far too expensive for what they’re likely to get in return. According to Amy Bach, an executive director and co-founder of United Policyholders, a San Francisco based nonprofit that advocates for insurance consumers, people often go on rumors, and there is a lot of misinformation out there about earthquake insurance in general. Including in the agent/broker community. Now there’s a lot of folks out there selling it that really don’t know about all the options. Don’t just assume it’s not a good buy for you, do the math. You really got to get out there, look at your options in the market. Don’t just get one quote, get three. There are a number of insurance companies selling earthquake insurance. But also, when you do the math, you got to understand if you have no insurance, that means you’re carrying 100 percent deductible. So if it’s the deductible that’s bothering you, look beyond that a little bit and really do the analysis. How much equity do you have in your home, what kind of soil are you on? Use your commonsense. You live in the house. So you have a feel, does your house shake? How much equity do you have in your house. And if your house were to have over $100,000 worth of damage, what financial resources would you have? That’s part of the analysis we ask people to do. And if you do the research and you get three quotes, and it just doesn’t pencil out, okay, don’t buy it. But just don’t say okay, earthquake insurance is a rip off, so I’m not buying it.
If you buy an earthquake policy in California, and you have a 15-percent deductible, as most people have, it’s very unlikely you’re going to see a payout except for the big one. So really, it is a little bit like a high deductible, catastrophic medical plan. In some ways, it’s almost like having a $250,000 deductible on your health insurance. That’s a little bit of an extreme example. But the fact is that people have to recognize that they’re not going to see a payout unless there’s a real lot of damage.
It is a myth that the federal government is going to come riding in with bags of cash. But the reality people need money to replace their essentials, and to make the repairs. I’m a resident of San Francisco, living in a wood frame house, and I’ve done what I can with the knowledge that’s available to me, and I made a determination that I would buy earthquake insurance. And I did the math, and I’m also investing in some modest seismic upgrades. So what we say to people is look, you may not know whether you’re on bedrock or alluvial soil, or whatever those fancy words might be, you can certainly go to the USGS website and you get a sense.