The Importance of Earthquake Insurance

October 11, 2016

On Oct. 17, 1989 a huge catastrophe struck the San Francisco Bay Area in the form of a 7.1 magnitude earthquake resulting in the deaths of 63 people, the destruction of over 11,000 homes, the collapsing of a portion of the Bay Bridge, and damages costing around $6 billion.

We all know how damaging an earthquake can be, yet only 10% of California residents opt for earthquake coverage. This is in part due to the fact that earthquake insurance is entirely optional in California. According to the Risk Management Solutions, newcomers to the Bay Area often haven’t experienced a large magnitude quake and are put off by the increasing premium costs and opt out of purchasing earthquake insurance.

According to the California Earthquake Authority (CEA) the likelihood of a severe earthquake occurring in California is very high. With over 2,000 earthquake fault lines, California has a major earthquake with a magnitude of 7.0 or more every 10 years, and a moderate earthquake of 5.5 or more about 4 times every year.

The map below from Science Magazine highlights the earthquake risk zones across the country. As you can see, California, along with other states along the west coast, poses the highest risks of earthquakes across the country.

Keeping these statistics in mind, it is strongly encouraged that you purchase earthquake insurance if you are a California resident! According to the U.S. Geological Survey (USGS), California is one of the most at risk states in the United States regarding earthquakes. Some cities in California most likely to be hit by an earthquake include San Francisco, Oakland, Los Angeles and other cities surrounding those areas since they lie on or near the San Andreas Fault.

If these statistics about the dangers of earthquakes in California aren’t compelling enough for you, here are some other reasons why you should consider purchasing earthquake insurance.

  • Your current homeowners or renters insurance policy probably does NOT cover everything.
    Your policy most likely does not cover structural damages and broken personal property so you will need to purchase additional coverage to avoid paying extremely high costs for repairs and replacement.
  • Your home may be located on or near a fault line. 
    If your home is located on or near a fault line, you are at higher risk of being affected by an earthquake and definitely should invest in earthquake insurance. You can check out the fault line and the earthquake risks of where you live to see if you are at a higher risk of being affected.
  • There will 100% sure be more earthquakes in the future.
    It is certain that California will continue to have earthquakes in the future. In fact, according to the California Earthquake Authority there is a 99% chance that there will be an earthquake with a magnitude of 6.7 of greater within the next 30 years. Because earthquakes are a common occurence and you can expect large earthquakes in the future, it is best to protect your property by purchasing earthquake insurance.

Sources: MarketWatch, Reuters, USGS
All images from Google
Contributor: Smruthi Sriram