The 5.2 earthquake that struck San Diego and other parts throughout the region in late June was a reminder from Mother Nature of the potential threat of danger that lurks beneath our buildings and homes.
In this blog, we’ll talk about earthquake insurance in California, and whether or not it’s worth it.
How We Got Here
Back in 1985, California law mandated that insurers who offered homeowners’ insurance would also offer policies for earthquake coverage.
Then, the premiums were affordable and the number of California homes and businesses with earthquake insurance rose.
When the 1994 quake of Northridge hit the San Fernando Valley, insurers were flooded with 300,000 claims that totaled $12 billion.
That was enough for some insurers to stop offering the polices altogether while others jacked up their premiums considerably.
That’s when the state legislature created the California Earthquake Authority (CEA), which oversees a state-operated pool of earthquake insurance policies.
Fast forward to today, premiums for earthquake insurance range from $800 — $5,000 annually. As for deductibles, they’re typically 15% of the total value of your home.
Using those numbers, the deductible for a $400,000 home would be $60,000.
The Government Won’t Bail You Out
If you think the government will come to the rescue when the next big one hits, think again.
Sure, the president will almost certainly declare a federal emergency, but government assistance to homeowners is meant to merely get people back into their homes.
In other words, post-quake government assistance isn’t meant to restore your home and property back to its condition before the quake.
In fact, emergency grants from the Federal Emergency Management Agency (FEMA) are capped at about $32,000.
Most of the rebuilding aid will come in loans from the Small Business Administration (SBA). Eligibility for these loans are normally initiated by about $40,000 in personal property losses and $200,000 in real estate losses. And you’ll have to pay back the loans.
Calculate the Premium for Your Home
The California Earthquake Authority has a cool site that lets you input information to calculate earthquake insurance and choices for your home – including homeowners, mobile home owners, renters and condo owners. You can find the site here.
If Your Home is Damaged by an Earthquake, Call J&M Keystone, Inc.
If your home or business is damaged by an earthquake, we urge you to contact J&M Keystone, Inc. by calling 800-368-2757 so that we can begin making your house feel like home again.
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