Do I Need Earthquake Insurance in California?
California Insurance Code Section 10081 requires insurance companies to offer earthquake insurance to homeowners. The law forbids insurers to cancel, refuse or reject policies because the homeowner elects earthquake coverage. However, only 12 percent of Californians have earthquake insurance.
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Earthquake Hazard
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According to the 2007 Uniform California Earthquake Rupture Forecast, there is a 99.7 percent chance of an earthquake measuring 6.7 during the next 30 years. The National Fire Protection Association states that homeowners have a 25 percent chance of a serious house fire during their lifetime. Homeowners may consider earthquakes a more serious risk than fire.
Individual Risk Factors
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The USGS says all homeowners are not equally at risk. Newer homes built to tougher building codes far from a known fault have less risk than those in the Coachella Valley, bisected by the San Andreas Fault. Homeowners should consider factors such as the materials used in their home, danger of soil liquefaction, type of foundation and the home's value.
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Affordability
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The California Department of Insurance's earthquake premium policy count reports the average premium for earthquake insurance is $947.54, as of 2010. The average fire insurance policy costs $505.60. Earthquake premiums vary with a home's location, age and value. The same home would have a premium of $740 in the Coachella Valley, but only $504 if located in West Los Angeles.
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References
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