Hurricanes and earthquakes are a stark reminder of the importance of getting disaster insurance. As a long time resident of San Francisco, I wonder about getting earthquake insurance every single year. San Francisco lies close to the San Andreas fault line which could start shifting at any moment. The last big earthquake was the Loma Prieta earthquake on October 17, 1989 which killed 63 people. After 23 years, perhaps we are due.
California mandates insurance companies send earthquake insurance prospectuses to all homeowners every single year. Each time I look over the earthquake insurance documents, I get this much closer to getting insurance, but I never go through with it because of the enormous deductible of around 10-15%. In other words, if my home is worth $2 million dollars, I’ve got to pay the first $300,000 out of pocket first before getting anything from the insurance company. Furthermore, the yearly premium is around $5,000.