A Lot Of Californians Have Bought Earthquake Insurance In 2017

Up until recently, only about ten percent of residents in California had earthquake insurance.

Such a low percentage of people invested in it, despite the fact that California has a history of serious earthquakes. Images and video footage of the 1989 Loma Prieta earthquake testify to this fact. It was a magnitude 6.9 earthquake that caused 63 deaths and $5.6 to $6 billion in damages. The media showing crushed and collapsed buildings, cars and bridges are shocking.

The Great 1906 San Francisco Earthquake is another testimony to the reality that California is prone to destructive earthquakes. Black and white pictures show destroyed building and fires.

Despite the fact that Californians are well aware of the risk of a “big one” happening, they have been less likely to buy earthquake insurance because enormous earthquakes rarely ever happen. However, in 2017, there has been a noticeable upsurge in the amount of Californians buying earthquake insurance. This is due to the fact that within such a short period of time, the year 2017, a lot of natural disasters have been happening in California. Mudslides and fires have opened their eyes to the possibility of disaster. Other events, such as the earthquakes in Mexico and the massive hurricanes in the Southeastern United States, have encouraged them to buy earthquake insurance.

Over the previous decade, the number of Californians with earthquake insurance increased by 7,000 annually. However, in 2017, alone, the amount of earthquake-insured people skyrocketed by 90,000—a record number.

There are also other factors that have contributed to the rise of earthquake insurance buyers, aside from the eye opening natural disasters that happened within the past year. Various new circumstances have been offered to customers. For example, the minimum deductible has been lowered from 10% of a home's value to 5%.

It seems that having more people insured would be a good thing. After all, if more people are insured, then post-earthquake recovery would be quicker, right? Well, there are some problems that come along with more people being insured. For example, when more people buy earthquake insurance, insurance companies must buy more reinsurance to spread out the risk. Rates would have to be increased by 2 to 4 percent, annually. This can result in a situation where earthquake insurance become unaffordable.

Discussions are being carried out about what should be done to keep the prices of earthquake insurance from skyrocketing.