Two strong earthquakes, a day apart, jolted many residents in the Golden State to think about preparing for the so-called Big One in their backyard. But as many Californians sought tips for preparing for an earthquake, state insurance officials said considering earthquake insurance was an often-overlooked part of the equation.
“This event is an important reminder that all of California is earthquake country ... and we need to be prepared,” said California Earthquake Authority CEO Glenn Pomeroy in a news release on Thursday.
Officials at both the California Department of Insurance, which regulates the industry, and the CEA, a privately funded insurer managed by the state, have over the years expressed serious concerns about the lacking number of earthquake policyholders.
“Earthquakes will happen,” the Department of Insurance warned on its website, “but we do not know exactly when. We do know that they can cause a lot of damage to your home and your belongings. You may even have to move out of your home while it is repaired or rebuilt.”
The agency reported that only 13 percent of Californians with homeowner insurance also had earthquake insurance in 2017. And that’s an overestimation according to Pomeroy.
“What’s the percentage of homes in general that have earthquake insurance, whether they have homeowners insurance or not? That’s more like 10 percent, maybe even a little less,” he told The Sacramento Bee by phone Saturday.
That included two counties in Central California less known for shaking – Sacramento and Fresno.
At the end of 2017, nearly 11,000 single-family Sacramento County homeowners with fire insurance also purchased earthquake insurance, according to a insurance department report, about 4 percent of all fire policyholders, the agency said. A similar percentage of condo owners were covered with both, while renters and mobile home owners were more likely to hold an earthquake policy at 12 and 15 percent, respectively.
In the greater Sacramento area – which includes El Dorado, Placer, Yuba and Sutter counties – there is a 76 percent likelihood of a magnitude 7 or higher quake striking within next 30 years, according to CEA. The region is also at risk of landslides, liquefied soils and levee failure.
Earthquake insurance is even more lacking in Fresno County. Only 3 percent of single-family home and condo owners with fire insurance also had an earthquake policy in 2017, according to the Department of Insurance report. Mobile home owners and renters are more likely to having insurance, but the report shows lower numbers in the Fresno area than it does in Sacramento.
The likelihood of a major earthquake striking the greater Fresno area – including Kings, Kern and Tulare counties – in the next 30 years is 75 percent, according to CEA.
What earthquake insurance covers
A common misconception according to Pomeroy is that homeowners, renters and condominium insurance covers damage caused by natural disasters such as earthquakes.
“Your basic homeowners insurance policy, that protects you for fires and home burglaries and stuff,” he said, “specifically excludes earthquake damage.”
And while providers have to offer earthquake insurance under California law, Pomeroy says they often just offer the minimum requirement, the “mini coverage,” he called it.
The costs of policies vary by location. For example, a 1,800 square-foot four-bedroom home in Sacramento could see an average annual cost of $150. A 2,400-square-foot home with four bedrooms in Fresno could set you back $200 a year. However, the CEA encourages Californians to check out their premium calculator on its website or contact their residential insurance company for more information.
“I like to say that Californians are now in the driver’s seat to choose the policy that is right for them,” he said, “and it’s important that they do.”