Revised rates might make
earthquake insurance more feasible

By Jeff Lazerson

Property values have soared since we hit bottom in 2010.

Do you have earthquake insurance to protect your increased equity from the big one, or even those nasty, random, hard-hitting tremors?

If you don’t have coverage, it’s time to take another look. After all, you have more at risk when the value of your home, less your mortgage or other liens, is on the rise.

The California Earthquake Authority writes 75 percent of the residential earthquake policies. Last year, it revamped its rates, reducing them on average 10 percent statewide.

That’s not all. There are new deductible options ranging from 5 percent to 25 percent and many expanded coverage opportunities from personal property to loss of use and more.

Before 2016, Californians took out an average of 7,200 new polices a year over the previous decade. With the 2016 improved rates, California gained 52,000 new policy holders, according to Glenn Pomeroy, chief executive of the California Earthquake Authority.

Leaping lizards! That’s more than a 600 percent increase.

Still, only about 10 percent of California homeowners carry earthquake coverage.

Coverage is based upon the cost to rebuild your home (according to your fire insurance policy), not your total property value. While there are a lot of variables to consider in pricing a policy, the average cost is $700, according to Pomeroy.

Orange County fares much better with more than 19 percent of homeowners having earthquake coverage, according to Nancy Kincaid, spokesperson for the California Department of Insurance.

There’s also government assistance for quake victims.

Should you suffer earthquake damage, the Federal Emergency Management Agency may provide up to $33,300 in grants to eligible victims, according to FEMA public affairs officer Brandi Richard. Those grants don’t have to be paid back.

Another agency that may assist you is the Small Business Administration, which provides low-interest loans of 1.9 percent for up to 30 years following a quake, according to SBA public affairs specialist Carol Chasting.

The maximum SBA loan for homeowners is $200,000 to repair or replace property damage and a separate $40,000 for personal property. Renters are can receive up to $40,000 for personal property. While qualifying is flexible, you do not automatically credit qualify.

SBA also can lend additional mitigation funds for up to 20 percent of the verified physical damage. These funds are for property improvements to prevent or minimize future disaster damages.

“You can’t have duplication of benefits or double-dipping,” Chasting said, meaning you can’t get SBA funds for earthquake damage covered from another source.

But earthquake insurance is more complete and guaranteed protection. FEMA grants and SBA loans are not automatic, nor are you guaranteed to receive the maximum eligible.

“It’s best to have (earthquake) insurance. FEMA does not provide wholeness,” said Richard.

For more information, check-out or contact your insurance agent.

If you have questions or comments, please contact Jeff Lazerson by clicking here.

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Jeff Lazerson - Mortgage Columnist since 2011