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March 29, 2014




I pay about $400 per year for a California Earthquake Authority (CEA) policy on my ~1450 square foot home. The policy has a 15% deductible, which amounts to about $40K. Basically, it's only useful if there is significant or total damage. To me, it's worth it in case the worst happens. I pay 66% more than this for my monthly health insurance premium, so the CEA policy cost is kind of a drop in the bucket for me.


I just emailed my insurance company to get a quote. I wonder if the quote would be lower several months after an earthquake as opposed to the very next day.


Sometimes there is a blackout period after an earthquake when you can't buy earthquake insurance.


Earthquake insurance is only expensive if nothing happens. Peace of mind is worth $400.


There's a mistaken free-floating social memory from the last big quake that the government will take care of things if it's bad enough. That time they did; the next time they certainly won't.

In 1994, no one had earthquake insurance; FEMA came to town and passed out checks to anyone who'd suffered even relatively minor damage. They flooded Los Angeles with so much construction work-generating money that it actually kick-started our climb out of recession.

When the next one hits, it'll be the polar opposite. There will be neither the political will nor the cash that existed in 1994.

In 1994 we had a new president who was acutely aware that GHW Bush went from stratospheric approval ratings after Desert Storm to losing an election in large part because Americans thought FEMA failed to do enough after hurricane Andrew.

Clinton beefed up FEMA soon after being sworn in. FEMA case workers swarmed Los Angeles in January 1994, many arriving directly from the Great Midwestern Flood of 1993 (they set up shop at the former Security Pacific building in Hollywood across from my office; nice people.)

This time we have a government that is painfully divided and cannot even gather the will to pass laws in ordinary times. California will never be a swing state, and any emergency measure to fund our post-quake recovery will not bring any benefit to the party that controls the House.

The uninsured will be left crying in the rubble. People are going to walk away from their homes.

The takeaway is that I've carried quake insurance since they offered it and would recommend the same to any homeowner. It's not hard to hit even a 15% deductible since it's measured by the replacement value of the building (not including the lot) and foundation damage quickly adds up.

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