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Earthquake damaged house in Santa Cruz after the Loma Prieta quake in 1989 (San Andreas fault) - earthquake insurance would help to pay for rebuilding here

Earthquake damaged house in Santa Cruz after the Loma Prieta quake in 1989 (San Andreas fault)

Do you need earthquake insurance?  If you live in Los Gatos, Saratoga, San Jose, or anywhere in Silicon Valley, you are probably aware that it is very likely that we’ll experience a violent quake within the next 30 years.  The San Francisco Bay Area is woven with a number of different faults, some very active, others quiet for thousands of years: San Andreas, Hayward, Calaveras, San Gregorio, Greenville, Silver Creek, Monta Vista – Shannon, and many more.  It is not hard to imagine one of them letting off some serious pressure.

What are the odds of a very severe earthquake in the Bay Area?

I looked up the stats on the USGS site, and there’s a 72% chance of an earthquake of 6.7 on the Richter Scale or more between now and 2043.  The most likely area is the Hayward fault (33%), followed by the San Andreas (22%), per this USGS report: that same report, page 1, it says there’s a 98% chance of a 6.0 quake somewhere in the Bay Area between now and 2043.   So it’s wise to take it seriously (this is reminding me to update my emergency supplies!) Click the image below to go to the pdf referenced above.

San Francisco Bay Area Earthquake Faults and Probability of Major Quake by 2043

San Francisco Bay Area Earthquake Faults and Probability of Major Quake by 2043

What does earthquake insurance cost?

Your premium for earthquake insurance varies based on many factors, including the age of the home, whether or not it is bolted to the foundation, the size of the structure, the exact location, etc.  For instance, if you buy a house in the Santa Cruz Mountains which sits directly on top of the San Andreas Fault, or in Fremont along the Hayward Fault, you would expect to pay more than if you were many miles away from either of these areas.  Further, the amount of your deductible will impact the cost, too – the lower your deductible, the higher your premium.
Also, it should be noted that earthquake insurance covers the structure and may not include the contents of the home.  The point of it is to make sure you can rebuild or repair after a major temblor.    There are separate policies or riders for possessions, but primarily for the essentials, not the frills.  Things such as fine Belleek china (which we lost in the 1989 Loma Prieta shaking) will not be covered.
Most people who obtain this type of insurance will get it from the State of California (even if it’s offered via their regular insurance agent).


Here’s a great resource for info from the California Dept of Insurance:
There’s a link on the page above that goes to the actual CA state insurance site, and there you’ll find a calculator for the cost of premiums from the California Earthquake Authority. [The CEA site says “CEA is a not-for-profit. We are privately funded, and publicly managed by a governing board. We are not tied to the state budget. We are financially strong, with a total claim-paying capacity exceeding $12 billion. Our participating insurance companies sell and service our policies (Homeowners, Mobilehome owners, Condo unit owners, and Renters) on our behalf.]  This is pretty cool as it allows you to change the deductible to as low as 5% and to increase or decrease things like “loss of use” coverage.
For most people, this type of insurance is very costly, perhaps running $2,000 to $3,000 per month with a large deductible and no possessions covered.  Prior to the Loma Prieta (1989) and Northridge (1994) quakes, this type of insurance was more affordable and was more commonly bought by home owners.  Today, the reverse is true.  Statewide, only about 10% of home owners opt to purchase this coverage.

More resources on earthquake insurance

Consumer Reports article from 2014: Should you buy earthquake insurance, is it worth it?

MarketWatch article from 2014, updated June 2016: Despite quakes, most California homeowners don’t have earthquake insurance

What is a cripple wall? (on this site)