I live in California. I've had earthquake insurance on my house since
the day I bought it in 1989.
My policy renews every year in June. This year, I received notice that
earthquake coverage would no longer be offered by my primary carrier.
Until now, the premium for that coverage was $250. $1000 deductible,
full replacement cost plus contents, liability and medical, and we've
kept the amounts current to the replacement value of the property.
Instead, my carrier said, I can buy separate earthquake insurance from
an outfit called CEA, or California Earthquake Authority. From what I
gather, CEA is a privately funded publicly managed organization that
fulfills the mandate that insurers in California must offer earthquake
The premium jumps to a whopping $631.00, and the deductible jumps to a
whopping $57,000 for a $380,000 home.
From what I've read, the premium and the deductible is so high because
CEA is required by law to have sufficient funds to cover losses in a
"500-year event." They have about $4 billion in reserve, which is not
enough, so they spend 40% of that on supplemental insurance in case of
such an event.
I don't live in LA or San Francisco. There are no major fault lines
near my home, although there are lots of little ones. I've lived in
this town since 1951 and the biggest earthquake I've experienced was
about a 5.3, fifty miles away. Strong enough to knock some dishes off
their shelves but that's about it.
I don't think this is a good deal. If there's an earthquake strong
enough to cause $50,000 worth of damage to my home, I'd be better off
getting a loan to cover it. Anything over that, I'd torch the place and
What do you think?
Here's some of my work:
You know best your total financial posture. Insurance is intended to
pay for losses that you choose not to pay for yourself or cannot
realistically afford. If you believe that your are in good enough
financial shape to absorb the cost of potentially high-value damage to
your home and contents, don't buy insurance. One caveat: If you have a
mortgage, make sure that your mortgage holder does not require you to
carry earthquake insurance.
The premiums should be astronomical and attune to the risk. The funds
that pay for hurricane damage should mostly come from people that
insist on building in some of those places. You want beach front?
Fine, but don't bitch to me when it floods.
At least building codes are getting them to build houses that can take
some of the beating.
On the other side of the risk equation, I live in northern Illinois,
and have earthquake insurance.
Might be useless, but it's dirt cheap.
There was a little tremor up here about the time I was renewing my
homeowners a few years ago. So out of curiosity I asked my agent how
much earthquake coverage cost. He was stumped, because nobody ever
asks. Said he'd get back to me, and did the next day. $40 bucks.
So I told my wife when she asked who was on the phone.
Then when renewal got close, I had to think about that, and decide if
I wanted earthquake insurance. I knew my wife knew what it cost.
Since there's that big New Madrid fault down in Missouri, which can
reach up here, and some others, and nobody can predict them, I
imagined an earthquake.
We escaped to the basement, and survived the house collapsing around
us. We managed to crawl outside, nursed our cuts and scrapes, and
felt lucky to have no broken bones, except my left arm and her right
leg and collarbone.
As we looked at our collapsed house, a total loss, my wife looked at
me and asked,
"Did you pay that 40 bucks for earthquake insurance?"
For sure. I was watching a show one day and they were interviewing
someone whose home on "breezy point" got trashed in a hurricane. The
owner cheerfully noted that "the insurance" has already rebuilt the
house twice so things really work out OK and they have that great view.
You want a great view and build your house on breezy point don't
complain when they actually increase the insurance premium to cover the
Why is that? It's a lot of premium money. If an insurance company
goes bankrupt, the operators can just move on to start another
insurance company, or go to work for one that didn't go bankrupt.
Maybe the taxpayer bails them out, like with AIG.
Insurance companies aren't dopes. They have the odds figured out
Actually they are being very smart. We live a few miles away from a
flood plane. After numerous floods the insurance companies paid off the
right politicians to have the start the Federal flood insurance. That
way they could keep their much more lucrative and predicable core
property insurance business.
It's even better than that for the insurance companies.
Private insurance companies get a cut of federal flood insurance
My son just bought a house on a so-called "100 year flood plain."
His neighbor's been there 40 years and says it never got close to
flooding. Anyway, I can't argue about what's a flood plain.
Mortgage lender requires flood insurance.
$600 a year just for the flood insurance, on a house that cost $115k.
That $600 is paid to State Farm, which gets a cut and profits by
servicing the insurance. But they have absolutely no risk.
FEMA has all the risk.
On Sat, 26 May 2012 07:29:43 -0700, Frank J Warner
Sounds like it's time to find another insurance company.....
Then again, insurance is a paradise for crooks. Dont ever trust
On the same note, I would not live in California for any reason. Why
live in a place prone to disaster? CA should have never allowed the
building of permanent structures knowing how the earth is unstable. It
should be limited to tents and teepees ONLY. Did you ever notice that
huge body of water in mexico, where the land extends down from CA.
That's the fault line. Some day that line will extend to Canada.
I dont know what they even call that part of the ocean, but it's obvious
what occurred there and how that fault line is going north.
Floridah - hurricanes (every freakin' year!)
the Carolinas - see above
Louisiana, Missouri, Mississippi - see above, with crawfish, catfish
and rednecks, and levees
The Eastern Seaboard - see above and Nor'westers
Georgia - see above, and still pissed about Appomattox
the Dakotas - snow and ice and darkness; too effing close to Canada
Kansas, Arkansas and most of the midwest - tornadoes, seasonal. Too
much Jesus. Don't buy a trailer. Jesus hates trailer parks
Texas, Oklahoma, New Mexico. Nevada - drought, steer manure, oil,
millions of acres of cactus, prostitution (hey! It's not ALL bad!)
Oregon, Washington - deluge, vegetarians, Starbucks, Mt. St. Helens, no
Minnesota, Michigan, Illinois, Iowa - fat, stupid people; birthplace of
Walmart, where your bacon comes from; Ted Nugent
Idaho, Montana - no speed limit (hmmm), highest ratio of guns per
capita (watch your speed, pardner, you're slowing me down.)
New York, Maryland, New Jersey, Pennsylvania - politicians, terrorists
and other rude people
The Appalachian states - Deliverance, dueling banjos, Foxfire
Maine - how much lobster can one man eat? And why are those trees
orange? Seriously? The frost level is 3 inches?
Hawaii - A loaf of bread costs $10. (Also, tsunamis)
Alaska - bears, Sarah Palin
California - 10 miles to a pristine beach, 30 miles to a pristine
mountain, 30 miles to a pristine desert, 2 hours to one of the most
beautiful parks on Earth, 60 miles to one of the major cities on the
planet, bikinis, oranges, almonds, movie stars, no toll roads, fresh
And a nice earthquake once per decade. The ultimate E-ticket ride.
For which I am currently uninsured.
Here's some of my work:
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