Posts Tagged ‘California Earthquake’

Californians Get a Wake-Up Call

Monday, April 12th, 2010
Not Unique to California

Not Unique to California

On April 4, a 6.9 earthquake struck Baja California, Mexico, causing high-rise buildings in San Diego and Los Angeles to sway. No fatalities or serious damage were reported, but the event was a wake-up call to remind Californians of their vulnerability. While the earthquake’s epicenter was a rural area, a comparable quake just 70 miles north would cause massive destruction of homes and infrastructure. Yet only 12% of homeowners and small businesses carry earthquake insurance. Inadequate insurance coverage is likely the consequence of both ignorance of the nature of disaster relief aid and concerns about the high cost of coverage. Insurance generally excludes earthquake coverage, but many people may mistakenly believe that they are covered or, if not, that the Federal Emergency Management Agency (FEMA) will assist them should an earthquake strike. Not all disaster victims will qualify for FEMA aid and those that do will find it is mostly low-interest rate loans that must be repaid. Then of course there is a time delay in receipt of the aid and a significant process involved in applying for it. Insurance is a surer bet. But it can be expensive. The state-run California Earthquake Authority provides coverage, but the average policy has a 15% deductible, which must be satisfied before the first dollar of benefits would be paid. Californians should think carefully about their coverage options. It is one thing to elect foregoing coverage (and to set aside savings to replace damaged assets); it is another thing entirely to fail to educate yourself and later find that your assumptions about insurance coverage were incorrect.