What the Mexico Earthquake Means for California Homeowners: Do You Really Need Earthquake Insurance?

In Quote by Madison Collins

On September 7th, an 8.1 earthquake approximately 74 miles from the southern coast shook Mexico. It had multiple aftershocks, some registering above 5.0 on the Richter scale, and the quake was felt by an estimated 50 million people. It was the strongest earthquake to Mexico in 100 years. At the last count, ninety people were confirmed dead as a result of the quake.

Just yesterday, Mexico was hit with another earthquake, this time in Mexico City. Registering at 7.1, the quake has killed over two hundred people, and the death toll is rising with rescue efforts under way. More about the aftermath of the earthquakes can be read here.

To many Californians, this may seem like a canary in the mine of speculation about, “the next big one”–the next earthquake that could wreak devastation throughout the state. Homeowners may fret about less about when the quake will happen and more about if their home will make it through.

A recent Facebook post revealed different thoughts about earthquake insurance among Murrieta residents:

“Doesn’t regular homeowners insurance cover natural disaster damages?”

“We got it when you bought a house in May. The house id $420k. I just don’t want to be in debt for the rest of my life just in case”

“It’s very expensive we have never had it.”

“Whatever your deductible is it’s better than taking a possible total loss!”

So what’s the deal? Do you really need earthquake insurance in Murrieta? Are you covered if you have a homeowners policy?

Let’s talk risk.

Murrieta rests near the Elsinore and San Jacinto faults. These are part of the larger San Andreas fault system. The Elsinore and San Jacinto faults are capable of producing at 7.5 earthquake, and the San Andreas fault, about sixty miles away, could produce a 8.0 earthquake. The San Andreas fault has not had a major earthquake for more than 300 years.

A view of the Elsinore, San Jacinto, and San Andreas fault system.

The US Geological Survey was tasked with estimating the impact that a 7.8 quake in the southern San Andreas fault system would have on nearby communities. It was projected that during a quake of that magnitude, if it started near the Salton Sea, Murrieta would begin to shake in 25 seconds. Estimated structure and contents damage was placed at $100 billion, with more losses expected with interrupted traffic and business routines after the quake. In this scenario, a quake of this size would be expected significantly impact and displace 100,000 households.

That’s a lot of families who might be displaced from their homes due to damage.

The fact is, there are 2,000 known earthquake faults that crisscross California, and most Californians live with 30 miles of a fault.

But less than 10% of houses are covered with earthquake insurance. Why? Do most Californians think a significant earthquake won’t happen soon?

The 2008 Shake Out graphic shows projected intensity of shaking in the event of a 7.8 earthquake along the San Andreas fault.

There is a 99% chance that a 6.7 or larger earthquake will happen in the next 30 years. Even scarier, there’s a 75% chance that a quake of 7.0 will happen in the next 30 years, which is 3 times stronger than the famed 1994 Northridge earthquake.

There’s been a lot of numbers so far, and Winchester’s goal isn’t to scare you into an earthquake policy. But insurance agents look at risk vs. cost, and it does seem like an earthquake could happen in Murrieta in most of our lifetimes.

So what are your options if an earthquake affects your house, but you don’t have earthquake insurance?

Standard homeowner’s policies do not cover damage from earthquakes. In fact, in 1984, California lawmakers thought that this was so important for consumers to know that they wrote a law legally requiring insurance companies to remind customers, at the time of sale and every year after, in writing, that homeowners policies do not cover their house in the event of an earthquake.

Many homeowners think that government aid will be available to help them during a natural disaster. But federal and state aid can be limited, and usually, this type of aid is used only for urgent health and safety needs. Plus, these loans also must be repaid.

These are the risks. And speaking from an insurance agent point of view, the best way to protect your home is to get an earthquake insurance policy.

Of course, having an earthquake policy isn’t required. It’s all about how much risk you are willing to accept, your ability to rebuild after an earthquake, your savings, etc.

But after hearing a presentation from the California Earthquake Authority with this information, Winchester’s president Suzy Lacy decided to put an earthquake policy on her home. She’s been a homeowner in Murrieta for seventeen years and previously had not had a policy.

Even if you decide an earthquake policy is not for you, it’s good to know your risk…and your options.

California Earthquake Authority (CEA) is a non-profit publicly managed, privately funded entity that provides earthquake insurance. The CEA was created by California lawmakers in 1996, after the Northridge earthquake of 1994.

The CEA was made to protect Californians after, “the next big one”. It’s there to help individuals rebuild if an earthquake destroys their home, and in the meantime, it’s a great source of information about earthquake preparedness and safety.

Plus it’s non-profit, and the California governor, state treasurer, insurance commissioner, and others head up the governing board–so we know that earthquake preparedness is a priority for our state’s leadership!

Several insurance carriers in California offer earthquake policies backed by the CEA. So there’s a good chance that the carrier that provides your homeowners policy also can write your earthquake insurance.

Earthquake insurance can be expensive–but the CEA has expanded options and created a range of deductible options. You can discuss coverage for your home, the other structures on your property, reimbursement for the expenses of living somewhere else while your home is being renovated, etc.

You can get a better idea of your risk, learn more about earthquake preparedness, or get a quote on earthquake insurance at the CEA’s website. It’s a premier source of information for Californians interested in how an earthquake can affect them.

Your insurance agent is also available to you help you through your options for earthquake insurance, as well! You can contact us at any time regarding your current policy or to discuss and earthquake policy. Call us at (951) 296-6678, email us at insurance@quotetowin.com, or visit us in our office near downtown Murrieta. We’re always happy to hear from you!

Until then, we’re getting ready for the Great California Shake Out on October 19th at 10:19 am!