California Earthquake Authority CEO Glenn Pomeroy understands the knock on earthquake insurance: Most homeowners think the premiums cost too much and the deductibles are too high to ever get paid for damages.
“This year, people ought to give earthquake insurance a second look,” Pomeroy said at a breakfast meeting of the North Bay Association of Realtors.
The earthquake authority works with 80 percent of the state’s home insurance companies to offer quake coverage in California.
Nine out of 10 state homeowners don’t have earthquake insurance, which is different than the standard home insurance policies that cover fire and certain other calamities — but not earthquakes. Pomeroy warned that homeowners without quake insurance could lose all their equity if their homes are destroyed in a major earthquake. “It can be a life-changing event,” he said.
The magnitude 6.7 Northridge quake in 1994 caused $20 billion in damage to residential structures, he said. Scientists have predicted a 99 percent chance of a quake magnitude 6.7 or greater somewhere in California in the next 30 years.
In an effort to attract more homeowners, the state authority in January expanded its policy offerings to allow a greater range of deductibles, to provide higher levels of personal property coverage and to give greater premium discounts for those who make their home less prone to quake damage.
earthquakeauthority.com website. He said a Santa Rosa homeowner could get $400,000 worth of replacement coverage for slightly more than $43 a month with a 15 percent deductible, and, less than $30 a month with a 25 percent deductible.
Those premiums can vary widely based on the home’s age, type of foundation and number of stories, as well as the amounts of related coverage selected.
Over the past two years, the authority has cut premiums a total of 55 percent, Pomeroy said. For the same period, housing reconstruction costs have increased 168 percent.
Already in the new program’s first six months, 22,000 homeowners have purchased earthquake insurance, he said. In contrast, the authority over the past decade has written on average about 12,000 new policies a year.
“The big one’s coming so we’ve got to get ready,” said Pomeroy.