Earthquake felt at the LifeTwo offices; Small, but a reminder of the big one

The LifeTwo offices were shaken (along with every other home and office in the Los Angeles area) last night by a 4.5 magnitude earthquake. While it was a small earthquake it was a reminder of the very large one that we had 13 years ago. That quake destroyed (or "red tagged" as we say) many homes in my neighborhood and its effects were visible for years afterward. I'm also old enough to have remembered and lived through the Sylmar earthquake in the early 70s. That one knocked out the water heater in our house as this was before people strapped them down (it's now part of the building code). I also remember my school being closed for the better part of a week.

You would think with those two experiences and the dozens and dozens of smaller earthquakes felt over the years that I would have earthquake insurance. But I don't and neither do 85% of homeowners in California. I certainly intended to when I bought my first home many years ago. But that was before I asked my insurance agent for a quote. He said something like "You're not going to like this...". He was right. As much as I tried to justify buying the insurance I couldn't.

For those of you unfamiliar with earthquake insurance, the coverage is limited and I remember all of the lawsuits against insurers following the Northridge earthquake for failing to pay claims. Second, the deductible is very high, 10%. While this might not seem outrageous, this could easily be $50,000 or more. This means you could have damage for $51,000 and then be responsible for 98% of that amount with the insurance company being responsible for only $1,000.

But the real problem is the cost. Adding it to my normal policy would have more than doubled the annual cost.

Despite the risks, I simply can't bring myself to buying it. However, I did take the savings of the first few years premiums and had a contractor retrofit the home and reinforcing the house to the foundation. We also did a remodel a few years ago that required the home be brought up to the most current earthquake codes. Looking at all of the additional work and cost which was entailed with that I think our home would have to be on the epicenter to sustain much damage.

To be honest, I wouldn't mind the peace of mind in having quake insurance. Being waken up at 1 pm by the earth shaking below me is an effective reminder of the risks I am taking. But unless and until there is an improvement in the economics of the coverage I don't see myself doing it.

Is this the same for people who live in tornado and hurricane regions?

Link to LA Times story on today's quake.