Homeowners Not Sufficiently Scared of Earthquakes
State officials and insurance companies think that homeowners in California aren't sufficiently scared of earthquakes. Only about 10 percent of California homes are insured for earthquakes. The California Earthquake Authority (CEA) has launched an $11 million advertising campaign with graphic images from the damage caused by the magnitude-6.0 quake that hit Napa in August 2014, and it is reducing policy costs by an average of 10 percent to bolster sales.
Part of the challenge in boosting sales of earthquake coverage is the perception that the government will respond to catastrophes. The Insurance Information Institute (I.I.I.) and federal data indicate that there has been an average of 63 disaster declarations a year in the 10 years through last year, compared with an average of 42 in the two decades before—helping to foster complacency among homeowners, who believe that the government will step in when disasters strike. Another challenge, cites University of Pennsylvania's Wharton School public policy professor Howard Kunreuther, is that mortgage bankers do not require earthquake coverage like they do for fire, wind and flood insurance.