Wednesday, September 28, 2005

Living on the Edge

Earthquake insurance seems like a no-brainer, right? After all, we live in a region where we know a destructive one -- if not the so-called Big One is inevitable.

That's why I get Jason's shock over at LAist (from whom we borrowed the graphic above) that just 15% of California homeowners carry earthquake insurance. But I'm not so surprised. We're a part of the 85% who don't.

In California, the 1994 Northridge quake caused so much damage ($12.5 billion for insured residential damage alone) that insurers were no longer willing to include earthquake coverage in the mix. Hence the birth of the California Earthquake Authority in 1996.

The problem: Right now, the premiums are too high, as are the deductibles. Your house would pretty much have to be completely destroyed before you collect any money... and that's unlikely. (More likely, you'll have a couple thousand dollars worth of damage -- which means you wouldn't collect a dime.)

Here's our quote from the CEA: For a $875 premium, our deductible is still $43.050 -- if our loss was below that amount, we'd get nothing. (Chances are, our damages would be below that amount.) Our contents coverage would be just $5,000 -- which barely covers what would need to be replaced if the house was totaled.

Hey, we're not thumbing our nose at the inevitable earthquake. Maria and I decided to bolt down our house instead, so that (fingers crossed) damage will be minor.

Should rates go down -- something the CEA is mulling, in the hopes that more homeowners will sign up -- we'd be willing to take another look at earthquake insurance. Until then, we're keeping our fingers crossed.

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