To the surprise of some insurers, the Oct. 1 earthquake that caused an estimated $213 million in damages in the Los Angeles area has generated little new business from worried homeowners.
"We expected to be bombarded with calls about earthquake insurance, and we were getting prepared for it, but we didn't get much new business after the quake," said Greg Cover, a regional vice president for Safeco in Fountain Valley.
Cover speculated that many homeowners have decided that insurance is just too expensive, especially since most policies have a 10% deductible.
"They probably took a look at the cost and decided to take a chance," he said.
Insurance companies stopped writing earthquake insurance after the Oct. 1 quake under regulations that allow the companies to declare moratoriums of up to 60 days. Most have now resumed writing policies, although Farmers Insurance Group still has a moratorium in effect.
At 20th Century Insurance in Woodland Hills, calls were up by 70% just after the quake, spokesman Rick Donan said.
But last week, inquiries were showing only a 19% increase. He said that about 80% of recent inquiries resulted in sales, however.
The Western Insurance Information Service, an industry group in Santa Ana, said that between 15% and 20% of the state's homeowners have earthquake insurance, a percentage that hasn't changed much since the Coalinga quake in 1983.
Jennifer Nicholson, a spokeswoman for the group, said the number of people who buy earthquake insurance tends to increase slightly after a quake, but many of those with new policies "a year later, tend to let it lapse."
Most earthquake policies pay off only when there is severe damage. The 10% deductible means that a policy pays nothing on the first $10,000 of damage on a home insured for $100,000. Some policies have deductibles of as much as 25%, while others have a flat deductible of $2,500.
That's why earthquake insurance covered only an estimated $30 million in damages from the Oct. 1 quake.