There is a lot of focus these days on California and the wildfires that have devastated the state. Of equal concern is the potential for even more disaster due to drought. From an insurance perspective, most homeowners in the state’s driest and most fire dangerous areas have homeowners insurance.
What they don’t have is insurance for earthquakes.
A report in The New York Times notes just 13% of Californians have earthquake insurance. This is in spite of an aggressive marketing plan engineered by the California Department of Insurance.
Businesses do even worse. Just one in 10 commercial entities — high-rise towers to low-rise office buildings — are insured against earthquake. Some are self-insured but most say the high price of the insurance keeps them from making the purchase.
Just as puzzling is banks issuing loans that don’t require homeowners and businesses to purchase earthquake insurance.
Scientists say since California lies on a huge number of geological faults it is just a matter of time before the “big one” hits. University of California, Berkeley earthquake expert Mary Comerio says, “What are we going to do when no-one has insurance and everyone has damage? I’m terrified of what’s going to happen.”
Swiss Re’s disaster specialist Alex Kaplan notes that earthquakes are potentially the largest “uninsured exposure from a natural disaster in the U.S.”
Add to that the average cost of a California home. It tops $500,000. So a major earthquake could end up costing the uninsured — and the taxpayer as well — billions and billions of dollars.
Source link: Insurance Business America