Do I Need Earthquake Insurance If I Live In California?

Let’s face it, a lot of people don’t know as much about insurance as they should. Yes, most people in the United States understand that they need a car-insurance, a homeowners policy, life insurance etc. Unfortunately, what many people often lack is insurance that is specified to the needs of their geographical region. Perhaps the best example of this is in California, in regards to earthquake insurance.

Whether the “big one” comes or not, California is a state that experiences earthquakes alarmingly often. In fact, earthquakes are so pervasive that ever year residents gather to participate in an earthquake preparedness drill dubbed “The Great Shakeout.”. Unfortunately, all that really means is that most California residents know the mantra “drop, cover and hold on”. Few understand that they really should have a special earthquake insurance policy to protect their belongings.

According to NRP, nearly ninety percent of California homeowners do not have an earthquake insurance policy. As if that isn’t bad enough, according to the California Department of Insurance, only one-in-ten commercial buildings are insured for quakes. That means that the majority of structures in California do not have adequate earthquake coverage. That’s incredibly alarming for the number of earthquakes experienced by that state on an annual basis.

California understands the stakes of the situation. That’s why companies like the publicly controlled California Earthquake Authority exist. That organization was formed after insurers stopped writing policies in the wake of the 1994 LA quake. The California Earthquake Authority works to help make earthquake policies affordable, effective and available for the general public, and they have been very successful at it.

According to NPR, the California Earthquake Authority has lowered the average rates for earthquake policies in California by more than fifty percent. All while increasing the amount of coverage provided by said policies, and making them more flexible by allowing people to choose their own deductible.

Despite all that work, many California residents are still not taking the time to invest in adequate coverage. Glenn Pomeroy, the CEO of the California Earthquake Authority. Pomeroy spoke with NPR about these issues, saying that “The fact that about 90 percent of the homes in California are in that unprepared state is a great concern…Seventy-five percent of the nation’s earthquake risk is right here in California. Scientists say we’re going to get hit again — it’s a certainty.”.

Remember, roughly a fifth of the entire country’s mortgage debt is held in California. According to a study by the R Street Institute, Fannie Mae and Freddie Mac have uninsured exposure in California of roughly $200 billion. Since both of those companies are backed by the federal government, the taxpayers could get hit with a hefty bill should the worst happen.

Earthquakes are a problem that will not be going away for California anytime soon. The reality is earthquakes in California are going to happen, and if the majority of scientists are to be believed, these quakes are only going to become more frequent as time goes on. Knowing that, it is all the more important that California residents take the time to get adequate earthquake coverage.

To inquire about a new policy, or to learn more about the one you already have, we encourage you to reach out to the staff at TGS Insurance. They are experts in their field, and always willing to work with you to find the perfect policy for your lifestyle, and your budget. Visit www.tgsinsurance.com to learn more.

Sources:
https://www.npr.org/2018/10/18/658570642/quake-insurance-california-pushing-people-to-say-yes-to-coverage

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