Mitigating Risks with Earthquake Insurance

For most home mortgages you will need flood insurance if you live in a flood zone. But if you live in earthquake country, there is no mandate to have the insurance, thus many people look at the cost of premiums and decide not to have that insurance. And if you live in a brick house in part of the country with an earthquake risk, it is likely that you cannot buy insurance, even if you wanted to make a purchase.

See this excellent article from The Seattle Times, Earthquake-Insurance Prices Soar in Washington, and Companies Hold all the Power.

For me it was around 1995 that I added earthquake hazard insurance to my home policy, after living in Washington state for seven years. I was working at Washington State Emergency Management at the time and I kept learning more and more about the seismic risks we face in Washington. The experts say we have a 5 percent chance of an earthquake each year from all earthquake zones combined. I figured my home was the biggest investment I have and if it were gone due to earthquake damages — I'd own the mortgage and have no asset.

In California the state had to step into the insurance market much like Florida did as insurance companies backed out of the market due to risks. I expect, per all the previous stories about earthquake hazards in Washington state, that nothing will be done to remedy the situation. Likely more people will drop their coverage as the rates go up — because as in the case of State Farm, the risks are such that they need more premiums per policy.