Local Realtors Learn How to be Insured Against the ‘Big One’

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“What if the 1994 Northridge 6.7 magnitude earthquake reoccurred today?” California Earthquake Authority CEO Glenn Pomeroy asked an audience of local realtors during an event recently.

It would cause approximately $75 billion worth of residential damage, Pomeroy explained. And most homeowners aren’t covered.

California Earthquake Authority CEO Glenn Pomeroy in Newport Beach. — Photo by Sara Hall ©
California Earthquake Authority CEO Glenn Pomeroy in Newport Beach.
— Photo by Sara Hall ©

Pomeroy spoke about preparing for the next big earthquake to the Newport Beach Association of Realtors Oct. 27.

Most Californians live within 30 miles of an active fault. There is a 99.9 percent chance of a 6.7 magnitude or larger earthquake sometime in the next 30 years, according to experts.

Another scary figure: About 90 percent of Californians don’t have earthquake insurance.

“I don’t believe we should live in fear,” Pomeroy said. “I do believe we should be prepared.”

In Orange County, about 16 percent of people have earthquake insurance, Pomeroy said. That’s better than the state average of 10 percent, but it’s nowhere near adequate, he added.

Premiums may be increased in Newport Beach because homes may be considered at a higher risk because of the Newport-Inglewood fault.

He also mentioned the recent “swarm” of earthquakes near the Salton Sea, which caused experts to warn residents of the high potential of a major earthquake in Southern California. The CEA phone rang off the hook after that, Pomeroy said.

A common misconception is that since people aren’t feeling sizeable earthquakes very often they have a “out of sight, out of mind” perception and won’t think it will happen.

“That’s not how geology works,” Pomeroy said.

During his presentation, Pomeroy demonstrated the CEA’s online “premium calculator” which estimates the cost of earthquake insurance for both home, condo and mobile home owners, and renters. For his example, Pomeroy used the homeowner calculator and used the 92663 Newport Beach zip code. He adjusted the options for premiums ranging in cost between about $28 to $75.

They’ve worked to make the coverage more valuable and flexible to fit a variety of budgets, Pomeroy said.

Pomeroy went over the top five things to know about earthquake insurance: The risk is real; So is the benefit of earthquake insurance; CEA is a nonprofit residential earthquake insurer; CEA has dramatically lowered rates and now offers a range of coverage choices, deductible options and new discounts for retrofitting older homes; and now Californians can choose the earthquake policies that meet their needs and budget.

He also busted a few myths about earthquake insurance, including that government assistance, if available, will be limited to urgent health and safety needs, and that earthquakes are not covered under a residential policy. 

The CEA was set up more than 20 years ago in the wake of the Northridge earthquake. It’s publicly managed and privately funded. It’s a lean and efficient system, he added. It’s set up to work well for it‘s more than 900,000 policy holders, Pomeroy said.

ca-earthquake_authority_more_options

“We haven’t been severely tested yet by a really big earthquake and that’s been to everyone’s advantage, because it’s given us 20 years to develop financial strength and get our experiences together,” Pomeroy said. “But when the day happens, we’ll be ready.”

“Things have changed dramatically in the earthquake insurance market just this year,” Pomeroy said.

Some of the changes they’ve made this year include increasing the personal property coverage up to $200,000, giving several options between five and 25 percent for the deductible, increasing loss of use coverage (additional living expenses to $100,000, offering mitigation discounts up to 20 percent, and more.

It’s all aimed at making it easier for the residents they serve to be covered, he said.

“It’s coming,” Pomeroy said, “and we should be prepared.”

For more information, visit earthquakeauthority.com.

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