A 6.1 magnitude earthquake has hit Northern California this week and shocked many residents, many of whom do not have earthquake insurance. The quake was a stark reminder to many people about the the precarious conditions they live in thanks to the San Andreas fault.
More than 100 people were injured during the quake, which started fires, damaged buildings and destroyed infrastructure. Authorities believe that the damage bill for the earthquake will reach $1 billion, a huge figure for what is actually a medium sized earth quake.
This earth quake is also a reminder for many citizens that they should obtain earthquake insurance if they live in California. It is estimated that only 10% of Californians have earthquake insurance. In some of the northern regions of California, that number is even lower. According to insurance industry research, less people are buying earthquake insurance each year.
Most earthquake insurance policies can be obtained for less than $1000 a year, but many home owners are avoiding the extra cost, at their peril. For many home owners, they don’t have an earthquake insurance policy because they have assumed their home and contents insurance policy includes earthquakes. This is not always correct, and home owners should carefully examine their insurance policy, particularly if they live in an earthquake prone area like California.
Some home insurance policies cover minor expenses for earthquakes, but do not cover the repair or replacement cost of the property.
The time between earthquakes can also lull many people into a false sense of security. The unfortunate reality is that a large earthquake is likely to occur within California sometime in the next decade and many home owners will be caught out.