I blogged about earthquake “swarms” (multiple earthquakes clustered in the same region) that occurred in Southern California in September of 2012. Now, less than two years later, Southern California has been rocked by more swarms of a slightly greater magnitude. Approximately two weeks ago, on March 17, 2014 I was jolted awake around 6:30 am when a 4.2 magnitude earthquake struck in the mountain pass between the Westside and the Valley.
Last week, Los Angeles County experienced a 5.1 quake centered in the La Habra/Fullerton region. Tuesday’s earthquake that registered 8.2 off the coast of Chile has made the radar of many Southern Californians as we wonder if the same will occur in our state. The effects of an 8.2 magnitude earthquake in California would be devastating, especially in the densely populated areas. Sadly, last week’s La Habra quake, though considered on the smaller side caused much more damage than expected. For those near the epicenter, more than 80 structures were evacuated and many homes suffered structural damage. I spoke with a homeowner who has significant damage from the La Habra quake, which included cracked walls and chimneys, along with personal property broken and scattered from the strength of the quake. As I spoke to the homeowner, I inquired regarding her insurance policies. She let me know that she didn’t purchase earthquake insurance and had to bear the brunt of engineering costs and rebuilding. The cost is already astronomical for her and growing.
Although in California a broker must offer up earthquake insurance at the time of renewal, the cost is considered so expensive that many homeowners opt out of purchasing such limiting policies due to price alone. I know personally, the cost of earthquake insurance (which has very limited coverage) is more expensive than my yearly homeowner’s policy. However, it’s important to remember that having an earthquake policy also gives peace of mind. Specifically, there are a few things that a homeowner should look for in earthquake insurance:
- Does the policy cover additional living expenses, and if so how much? – Having a place to live if your home is destroyed is key, and does it provide enough during the time of rebuild?
- Does the policy cover my personal property items that I am concerned about? *Note that specialty items such as sculptures and other art is not usually covered.
- Does the policy pay for community assessments? (if in a condominium or homeowner’s association with common areas)
- Is the coverage enough to rebuild the part of the structure that the homeowner is responsible for?
The Merlin Rule of Probability is scientifically and actuary proven and provides the following concerning earthquakes:
The odds of an earthquake striking you decrease with the more earthquake insurance coverage you buy and the better you prepare for its occurrence.
Statistics show that only 15% of the homeowner population in California has earthquake insurance. Perhaps with the recent swarms and the large quake off of Chile, its time to thoroughly discuss earthquake insurance needs with your broker to make sure that your home and family are properly covered in the event of such a disaster. With a waiting time of at least one month before an earthquake policy can take effect (yes, its different than regular homeowner’s insurance), it’s time to seriously look at the proper earthquake covered to avoid being a horrible statistic in the event a large one occurs.