T Nation

Earthquake Insurance Poll


In the 3/22/06 edition of the Las Vegas Review Journal an Asssociated Press article stated that 86% of California homeowners do not have earthquake insurance. The number one reason for not carrying the coverage was cost and number two is the belief that the government will bail them out.

How many of you T-Nation members have earthquake insurance and if you wish to answer how much does it cost you?

Las Vegas does get earthquakes but not as frequently and nearly as intense but I do live about 1 mile from the largest fault line running through the Vegas valley.


I've got it.

Premium: $3,263

Deductable: $130,000

Many without it assume that in case of disaster, the government will step in to save everyone's ass. If they are right, then I'm the idiot. I'm betting they are wrong.


To rely upon the government for anything other than the national defense is foolish at best.


This may sound harsh, but why is the government (re: the taxpayer, you and me) responsible for bailing someone out in this situation, particularly when insurance IS available?


I do not own a house in California, but I know people who do, and I've been told that earthquake insurance is extremely expensive.


About 15% of California's population lives in areas that are not prone to earthquakes or more than minor earthquakes. Aside from that though, I would assume that a great deal of this has to do with reliance upon the government, which is reasonable to expect given the post-disaster that the government has extended to various parts of the country (look at how much is being promised to the huricane stricken areas presently - although this figure is quite likely to shrink after the midterm elections). The government has historically rebuilt a great deal of infrastructure in disaster-prone regions following a catastrophy (California with past earthquakes, the plains states with past floods, costal areas with past hurricanes, etc.). Given the visibility of things such as roadways that are repaired by the government it is not unreasonable to expect such an assumption on the part of people albeit an unwise assumption to make.

I do not know what exactly the premiums are, but my grandmother who lives in southern california can afford hers on a fixed income, so I find it difficult to accept the proposition that cost is significant a cause for the lack of coverage amongst my fellow Californians.


And this makes it the governments responsibility how?


It's precedent. Very few people in NO had flood insurance, yet we're going to be rebuilding that whole damn thing on the taxpayer's dime. Happens every three or so years around here, too. There are several communities right on the Missouri river (I mean right on) that get flooded every third or fourth year, get destroyed and rebuilt in the same place by the federal govenment because, and I quote, "the Corps of Engineers should have foreseen this flooding and prevented it." Yup. Couple of hundred billions of gallons of water go by each year and these people build no more than three feet above normal levels for the river. Brilliant.


I don't have it. And these numbers are why. That much money to save your butt in only the most catastrophic situations doesn't fit into my planning. Obviously it makes sense for Magister because he's doing it. Different strokes for different folks.
And, by the way, I neither want nor expect Uncle Sam to bail me out.


I have Earthquake insurance, of course. In California there's the CEA:


... that provides the insurance and makes sure it is not too expensive.

People that do not have Earthquake insurance are not only stupid, they are selfish. However considering how much money CA pours into the Federal government, if CA does experience a major quake almost everybody expects them to help us... I can't say I agree with that, however it does not surprise me.

Just goes to prove my theory that 90% of the population is incapable of any intelligent thought...

NO should not be opening a precedent: the disaster there would have been minimized IF the Feds had done their job with the levees, hence it IS their responsibility to clean up; against a quake, on the other hand, we can't really do much more than we're already doing (with our building codes) so if there's damange we can only blame Nature (or God, if you're into that kind of thing).


This is the type of response I was looking for.


I'll tell you what I think is stupid.
Let's say I can rebuild my house for $230,000. Let's say my deductible is $130,000 (per the first example). I think it's stupid to pay $3,600 a year to cover me for $100,000 (230,000 - 130,000) when I can get a loan from ANY bank for not much more expense per month. (Especially when interest expense on mortgages is deductible from your federal taxes.)
If my house were DEFINITELY going to get DEMOLISHED, then it makes sense to have the insurance. If my odds are even 50/50, then you can keep your rip-off premium and gigantic deductible.
Another thing I think is stupid are broad generalizations, but I guess that's another topic.


"Magister ludi" did not say his house could be rebuilt for $230k. In fact, considering the deductible, and the premium, and the house prices in CA, I'm willing to bet in his case it would be upwards of $500k. This is assuming that the ground doesn't collapse and you can in fact rebuild on the same piece of land.

I was in SF during Loma Prieta, and I saw first hand the kind of destruction an Earthquake causes -- and how much it costs to rebuild.


The CEA is not out to make money. So if you want to attack the costs, at least come up with some REAL numbers: get a quote from the CEA, and get a quote from a contractor, rather than coming up with absurdly low house rebuild costs just to justify your beliefs.


First I'll state that I'm a renter, so it doesn't affect me.

CA is due a bailout in case of a major earthquake. CA is a majot net positive contributer to the federal government year after year. Louisiana on the other hand is a net drain on the federal budget year after year and is still given tens or hundreds of billions of dollars in bail out money when hit. Many states in the midwest striken by frequent floods are net drains on the budget yet still get bailouts. Some areas of Florida get hit almost annually by hurricanes but get federal aid anyway (even multiple times a year). Fairness dictates that we've more than paid our dues compared to these other disaster states and if they're getting all of our money now, we should be getting some of it back at some point in the future.

The ideal would be if the federal government did more for prevention and less for bailouts, but I don't see this happening and it would be grossly unfair if it only started when CA was struck.


I don't often say this, but dude, you're dumb. (Not a generalization because I'm specifically addressing you.)
I quoted Magister's deductible number.
I could sell my house for around a million bucks next week. But all the value is in the land. And the land will still be there after the quake, unless the REALLY Big One hits; in which case, who cares?
My home owner's insurance (that covers fire etc.) has the replacement value of my HOUSE at around $230,000.
I could build a smaller house or even a bigger house, but it kinda seemed like a waste to get a contractor's quote for a discussion on an internet forum.
I'm sure you'll come back more irrational than before and flame me as hard as possible, so have fun. I'm out.


The median home price in California is over $350,000 and the local median home price is even higher in earthquake prone areas (ie: SF, LA, SD... I believe that the median home price in LA county was $860,000 as of the last fiscal year). Given this fact such insurance is not such a rip off, particularly as more earthquakes are an inevitability here.


That's really mature. And you quoted HIS deductible assuming that it would apply to YOUR house. You did NOT quote HIS house rebuild value or YOUR deductible.

So I am dumb?

Goes to show how much you do NOT know about Earthquakes. Look at the site I posted; it clearly shows the effect of even the (relatively small) Loma Prieta quake; the ground cracked in SEVERAL places all over and around the fault and caused it to liquify in several other places, even far away from the fault.

Did you get a quote from the CEA for a quake insurance for YOUR house? If your house really is that cheap to rebuild, I'm sure your deductible will NOT be $130k even for a much, much lower yearly payment.


Those median prices look accurate to me. But it's irrelevant. If you're a home owner, you need to know that the insurance company doesn't care what you bought your home for or what you can sell it for. Most of the value (especially in CA) is in the land. The insurance company only cares what it costs to REPLACE a DWELLING similar to the one you lost.

I'm honestly not looking for an arguement. If you're a home owner, I really hope that you make the best decision for you. If you want earthquake insurance, I hope you get lots of it. Just do so knowing it has nothing to do with what you can sell your place for.
Best wishes for no earthquakes!!


Look, as I said I understand your frustration. I too am annoyed by the lack of return on the billions of dollars we (Californians) pay in Federal Taxes.

However: considering how incompetent the Feds are being at rebuilding New Orleans, do you even want to rely on them?

Finally, we'll probably need all those Federal funds around 2050, when the LA basin and Sacramento start flooding, something that we are now pretty sure WILL happen. We'll be competing with Manhattan (that will have also to be protected, possibly by something even bigger than the Delta Project of The Netherlands in the Early 90s), but, still, I'm pretty sure that having the two biggest cities in the US in the brink of being submerged WILL provide enough incentive for plenty of federal funds to pour in.

A quake will not, however.


I will surely conceede these facts, and I only wish I could afford to buy a house here. Most of the people I know who have earthquake insurance are retired, near retirement or live in the Beverly Hills / Bell Air / Brentwood / Malibu area and have the requisite mansion of a house to go with the area - it would not make too much sense to have a policy otherwise, as you point out.