Jul 30, 2008 11:48 am US/Pacific
Fewer Homeowners With Earthquake Insurance
LOS ANGELES (CBS) ―
Just 12 percent of California homeowners have earthquake insurance, down from the 30 percent who had policies when the 1994 Northridge quake struck, according to an insurance industry study released today.
Candysee Miller, executive director for the Insurance Information Network of California, said the absence of a major quake over the past decade was partially to blame.
"Historically, the longer California goes between major quakes, the more homeowners drop their earthquake coverage," Miller said.
The relatively high price of policies on the seismically active West Coast also drives away some homeowners, while others mistakenly believe that
their homeowner's or renter's insurance will cover earthquake damage.
Like flood insurance, earthquake insurance must be purchased separately, according to the Insurance Information Network of California.
An IINC poll in 2006 found that 31 percent of Californians thought they
had earthquake insurance, while only 13 percent actually owned any.
Earthquake insurance rates are based on the location as well as the
construction and age of the house, according to the California Earthquake
Authority.
Later-model homes tend to be cheaper to insure than older ones.
Construction features that help a home withstand an earthquake and make it cheaper to insure include:
-- a slab foundation instead of a raised one;
-- one-story tall instead of multi-story;
-- and wood-frame construction instead of unreinforced masonry.
Earthquake insurance policies often have deductibles between 10 and 20
percent.
The California Legislature in 1996 created a reduced-coverage earthquake
insurance policy known as a "mini-policy" in an attempt to make coverage
more affordable.
Mini-policies are so named because they do not cover non- essential items, such as swimming pools or patios.
(© 2008 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)
