The Percentage Of Californians With Earthquake Insurance Has Been Tumbling For 20 Years

California earthquake mapUSGSA plot of every earthquake greater than mw 3.5 since 1850.

On Sunday, large swaths of Napa Valley got hit with a 6.0 earthquake.

According to Bloomberg, the event is estimated to have caused $US4 billion in damages.

However, only half of that is likely to be picked up by insurance companies. That’s because just 10% of California residents currently own earthquake insurance, according to the Insurance Information Institute (III).

Despite the fact that, as the state’s earthquake insurance authority puts it, “no part of California is ‘immune’ from earthquakes,” coverage rates have plummeted over the past two decades because there hasn’t been a major quake.

“Nothing sells earthquake coverage like an earthquake, and the more time elapses between major events, the more people believe it will never impact them,” Dr. Robert Hartwig, an economist and the president of the III, told Business Insider Monday.

Over the last 20 years, insurance coverage in California has dropped from about one in three homes to as much as one in 10, he said. In Napa Valley, he estimated that the coverage rate is less than 6%.

For a California renter living in or around San Francisco or Los Angeles, earthquake insurance premiums cost less than $US150 a year. For a condo or homeowner the cost is between $US700 and $US1,000 a year. (The California Earthquake Authority has a cost-calculator here. Businesses must purchase insurance directly from a private insurer). Hartwig said costs are unlikely to rise immediately following Sunday’s quake, since many will likely perceive it as an isolated event, unless aftershocks follow.

One need only look at the map above, or the following chart showing the all-time most damaging U.S. earthquakes in recorded history, to see how disturbing it is that there’s so little coverage:

In July, the U.S. Geological Survey updated its quake forecast model to reflect recently discovered faults in San Jose, Vallejo, and San Diego, and increased hazard activity in some parts of San Francisco and Los Angeles.

Here is the new map showing the likely intensity of an earthquake hitting in the next 50 years.

National earthquake mapUSGS2014 USGS National Seismic Hazard Map, displaying intensity of potential ground shaking from an earthquake in 50 years (which is the typical lifetime of a building).

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