If last week's twin earthquakesjogged you into thinking aboutthe quake insurance you probably don't have, here is a quick primer on the subject, gleaned from insurance agents and industry sources.
Quake insurance is offered only in conjunction with an existing homeowners insurance policy, according to Jim David of the Melrose Insurance Agency of West Hollywood.
Even though rates for earthquake insurance vary widely among companies, unless you change your insurer, you will have to accept their established rate.
"The cost of earthquake insurance typically ranges from about $2 to $18 per $1,000 of coverage, with most companies charging in the $2 to $4 range," said Richard Rupp of Rupp Risk Management Resource Center of Newport Beach.
20th Century Insurance bases its earthquake coverage on the coverage amount of its policyholders' homeowners insurance, a saleswoman for the Woodland Hills-based, direct-writing company said.
Older Houses Cost More
For example, if you have $115,000 worth of homeowners insurance coverage for the structure, the annual premium for earthquake coverage is an additional $230 and the deductible is 10%, or $11,500.
Older houses cost more to insure than newer ones and masonry houses are often uninsurable.
The State Farm premium of $160 a year for $100,000 of coverage is for wood-frame houses built since 1950, according to a La Crescenta agent. For houses built from 1940-1949, there is a 50% surcharge; for houses built before 1940, the surcharge is 100%.
Masonry houses--those constructed of adobe, brick or concrete block--are most likely to suffer damage in a major quake and are most likely to command the highest premium, if you can find insurance at all, Rupp said.
Wood-frame and steel-frame construction are least likely to receive major damage in a quake and command the lowest premiums, he said.
For condominium owners, the homeowners association makes the decision whether to purchase earthquake coverage on the structure and common areas, Rupp said, and the rates are higher than for one- to four-family buildings, he said.
To cover quake damage inside your condo unit--or your apartment, if you rent--ask your agent about a personal articles floater policy--which covers articles that are readily movable--on china and other fragile items that could be damaged in an earthquake, advises Rupp.
More Californians are buying earthquake insurance than ever before, thanks largely to legislation.
Before a 1985 California law requiring insurance companies selling homeowners insurance to offer quake coverage, only about 6% of the state's 7 million houses had such coverage, Rupp said. The percentage has risen to about 18% today, he said.
"The percentage of those buying earthquake coverage is increasing each year, despite the fact that earthquake coverage is what we in the industry call a 'negative offering'--coverage that isn't widely publicized or emphasized," Rupp said.
Policy Writing Varies
The La Crescenta State Farm agent said about 20% of the 1.1 million State Farm homeowners insurance policyholders in California have earthquake coverage.
A Westside Allstate insurance agent said only about 10% of his homeowner insurance clients have earthquake coverage, about half the statewide average, despite some of the highest home prices in the nation. By contrast, independent agent Jim David of Melrose Insurance Agency, said that about 25% of his clients have earthquake coverage.
There was no interruption in the writing of new quake insurance policies in the wake of the last Monday's temblors. State law permits companies to suspend writing new earthquake insurance policies for up to 60 days after a quake, in order to contain damages caused by the immediate earthquake and its aftershocks, Rupp said.
Most firms stopped writing new policies immediately after the Oct. 1, 1987, Whittier temblor, which measured 5.9 on the Richter scale.
Finally, California, with about 10% of the nation's population, accounts for 70% of the earthquake insurance policies written in the nation, according to Dave Crocker of the Tustin-based Western Insurance Information Service.