Wednesday, October 19, 2011

Earthquake Insurance Is like the Flu Shot


Cary Mann knows a major earthquake in Southern California could be catastrophic. But Mann doesn't carry earthquake insurance on either his Cathedral City home about 115 miles east of Los Angeles or on the hair salon he co-owns there.

"None of my family has ever had it," he said. "They've always said that if there was ever going to be a 'Big One,' the damage would be so massive that the insurance would never be able to pay out to everyone."
Many in the state feel the same way. According to the Insurance Information Network of California, fewer than 12% of the state's homeowners had earthquake insurance last year, and fewer than 10% of businesses had the coverage.

I'm quite impressed with the excuses.  According to one source, standard earthquake insurance in the East has a return period of 2000 years.  In other words, the rate is set for a totally destructive event at that probability.  I don't know what the insurance rate is in California, but a destructive event can be expected every 50 years.

If you are in the east, have a brick house, and have been strongly feeling all these latest earthquakes, then you should get the insurance.


Anonymous said...

I have earthquake insurance on my house in Burlington and we didn't feel a thing in the last two shakes. it costs peanuts to add it in this part of the country. Do you think the actuaries have it wrong with regard to risk in Southern Ontario?

Harold Asmis said...

They probably have it wrong, if they are pricing at 1 in 2000. I give Burlington a 1 in 300 chance for a house-destroying earthquake. If you didn't feel the last earthquakes, then you are probably on 'iron' till, and will be happy. Many houses in that area are on sag ponds, and traces of the fault.

Anonymous said...

yes, I am on Halton till overlaying Queenston shale right at the base of the escarpment but a good 400 feet above the lake. No ponds around here but the groundwater often leaks right out of the soil.

Do you really believe we have odds of 1 in 300 of a house destroying shake when that hasn't even happened in the 400 years of history in Ottawa, Montreal and Quebec City (much riskier areas). To my knowledge, a building has never collapsed in Canada from an earthquake.

Harold Asmis said...

House destroying in the sense that it can't pass inspections. Lots of earthquakes have reached that. Some have been in the middle of nowhere. You have to combine soft soil with a near epicentre. Any house that is experiencing settlement distress, such as in High Park, will be knocked over the edge. I remember seeing 2 houses over there that were leaning against each other!