The Earthquake that has Not Happened [Yet]

Imagine a scenario when you return home to find your home in ruins from an earthquake and after checking with a local contractor realize that you will not have the funds to rebuild the house you used to have. According to NBC news, only 10 percent of Californians have Earthquake Insurance.

I mean how many Marin residents have $500 per square foot in a bank to rebuild their homes?

Although it may be possible to take on loans, sell stock, dip into emergency & retirement funds - all of this could potentially have be a major issue with your future ability to retire.

The problem with the way consumers look at Earthquake Insurance in California is two fold:

Issue 1: Many consumers - see the bi-annual Earthquake Insurance Offer from their homeowner's insurer and assume that that is the best rate available. Often this insurance offer is from the CEA and usually it has the 15% deductible prechosen as the option.

These assume that these 'offers' are the best there is out there. Sometimes they are - but usually they are not. An independent agent is often able to check with two, three, or even four standalone earthquake insurance vendors to come up a better solution. Examples of these vendors include: Arrowhead, ICAT, and Geovera. [This is all of course for personal lines earthquake insurance, not commercial risks.]

Issue 2: There is nothing standard about a 15% deductible. It is just the deductible option in the middle and the most frequently chosen. Some insurers have deductibles that range from 2.5% all the way up to 25%. In addition most of insurers also have other various customization options available. Changing the deductible will have a tremendous affect on the overall premium. What this means is that by raising the deductible the premium might go from completely unaffordable to well...doable. Just like that.

How Does Earthquake Insurance Work?

Earthquake Insurance covers the peril of earthquakes and not any other types of land movement such as landslides. It is different from homeowners or fire policies by requiring large deductibles. Homeowners insurance does NOT cover your home from earthquakes unless it is endorsed to do so via a separate policy. All home insurers in California are required to offer you EQ insurance, and many insurers partner with the CEA [a public / private insurer] to provide such offers.

Who should Consider Shopping for Earthquake Insurance in California?

Frankly everyone that lives in California should consider it. Especially property owners. Believe it or not - it is very possible that the future premium might not be as high as you think it might be.

Who offers Independent Standalone Earthquake Insurers?

Many independent agencies have access to at least one standalone earthquake insurer. Some broker agents have access to two or more. Almost all agencies have access to the CEA as well.

Conclusion:

Thanks for reading about Earthquake Insurance. Contact your agent today to get a sense of the different premiums that you can pay for earthquake protection.

Scott W Johnson, is the founder and manager of Marindependent Insurance Services LLC, a Marin boutique Insurance Agency focused on in depth insurance reviews and complex consumer risks. Marindependent offers Earthquake Insurance from at least four different vendors.