The earthquake that jolted the Napa Valley last weekend upended more than wine barrels and mobile homes. It also was an unsettling reminder of how few Californians – homeowners and businesses alike – carry earthquake insurance.
In large part because of cost, complacency and the “it’ll-never-happen-to me” syndrome, Californians are more likely to own a swimming pool than an earthquake policy.
In the last decade, the number of individual Californians taking out earthquake policies dropped about 8 percent, from 1.21 million sold in 2004 to 1.11 million policies last year, according to state Department of Insurance figures. For businesses, the slippage was even more pronounced, plummeting 29 percent, from 119,900 policies sold in 2004 to 84,000 last year.
Overall, just 10 percent of California businesses and homeowners with property insurance also carry earthquake coverage.
Until Sunday’s 6.0 temblor, Napa Valley had not had a major quake that size since 1989.
Traditional homeowners policies do not cover damage from a quake. Earthquake coverage requires a separate policy, purchased from a homeowners insurance broker. In California, all home insurance providers are required to offer earthquake policies – and to send their policyholders a reminder every two years that such coverage is available.
Cost is a big reason so many people opt out of buying earthquake coverage. The average annual premium is $800 for a California homeowner; for a large business, premiums can run upward of $20,000.
As of late Tuesday, a preliminary estimate put damages and losses in Napa County – for the wine industry alone – at $38.2 million, according to the Napa County Emergency Operations Center.
For homeowners with earthquake coverage, premiums vary based on a home’s age, location, number of stories, foundation type and other factors. There’s also a sizable deductible, which for most homeowner policies is 10 percent to 15 percent of the insured value.
In the Napa region, less than 6 percent of homeowners and renters in Napa have earthquake policies, and less than 10 percent in Sonoma County.
Along with repairs, earthquake insurance for the business sector covers so-called “business interruption,” the loss in revenue when a retailer or other business is closed because of damage. Business interruption is often an uncalculated risk factor, especially for smaller businesses. When there is structural damage and customers can’t come in for some time, that can be a pretty big hit.
In large part because of cost, complacency and the “it’ll-never-happen-to me” syndrome, Californians are more likely to own a swimming pool than an earthquake policy.
In the last decade, the number of individual Californians taking out earthquake policies dropped about 8 percent, from 1.21 million sold in 2004 to 1.11 million policies last year, according to state Department of Insurance figures. For businesses, the slippage was even more pronounced, plummeting 29 percent, from 119,900 policies sold in 2004 to 84,000 last year.
Overall, just 10 percent of California businesses and homeowners with property insurance also carry earthquake coverage.
Until Sunday’s 6.0 temblor, Napa Valley had not had a major quake that size since 1989.
Traditional homeowners policies do not cover damage from a quake. Earthquake coverage requires a separate policy, purchased from a homeowners insurance broker. In California, all home insurance providers are required to offer earthquake policies – and to send their policyholders a reminder every two years that such coverage is available.
Cost is a big reason so many people opt out of buying earthquake coverage. The average annual premium is $800 for a California homeowner; for a large business, premiums can run upward of $20,000.
As of late Tuesday, a preliminary estimate put damages and losses in Napa County – for the wine industry alone – at $38.2 million, according to the Napa County Emergency Operations Center.
For homeowners with earthquake coverage, premiums vary based on a home’s age, location, number of stories, foundation type and other factors. There’s also a sizable deductible, which for most homeowner policies is 10 percent to 15 percent of the insured value.
In the Napa region, less than 6 percent of homeowners and renters in Napa have earthquake policies, and less than 10 percent in Sonoma County.
Along with repairs, earthquake insurance for the business sector covers so-called “business interruption,” the loss in revenue when a retailer or other business is closed because of damage. Business interruption is often an uncalculated risk factor, especially for smaller businesses. When there is structural damage and customers can’t come in for some time, that can be a pretty big hit.
