Southland Quake Insurers Feel No Jolt

Despite the devastation and destruction left by the Bay Area earthquake, homeowners in Southern California are not rushing out to buy earthquake insurance, industry officials said Thursday.

Theresa Bedoy, Allstate underwriting manager for Southern California, said her company’s local agents are only getting about “one or two” inquiries a day about earthquake insurance.

“We got more calls after the (1987) Whittier quake, but that was because of the earthquake’s proximity,” said Bedoy, who works out of Orange County. “We have surveyed several of our 550 agents in Southern California. They’re getting about one or two calls a day. People don’t usually call and ask for earthquake insurance, but it’s happening now.”

Lynn Knierim, part-owner of the Hartley, Scott & Knierim Insurance Agency in San Diego, agreed that local homeowners have not shown a sudden interest in earthquake coverage.

“There has been no big rush to buy earthquake insurance in San Diego. At least, not with our company. Most people know that earthquake coverage is available to them. The law in California says that, if you write a homeowner’s policy, you have to give the buyer the option of buying earthquake coverage, too,” Knierim said.

Although earthquakes are a common, and, some would say, routine, phenomenon in California, earthquake insurance is not a popular item. One reason for that is its high cost. In San Diego County, premiums cost $1.80 to $4 per $1,000 of coverage, depending on the company. Earthquake premiums in San Diego County are cheaper than in Los Angeles County, industry officials said, because the chances of a severe temblor are greater there.

In fault-riddled Imperial County, premiums cost up to $12 per $1,000 of coverage, Bedoy said. That is the highest rate in California, she added. Deductibles on earthquake policies are usually 10%, whereas deductibles for a regular homeowner’s policy usually run from $200 to $1,000.

Statewide, about 1 out of every 5 homeowners have earthquake insurance, said Debbie Rosenzweig, spokeswoman for the Western Insurance Information Service office in Orange County. In the Bay Area, the rate is a little higher, with 1 out of every 4 homeowners having earthquake coverage. Figures for San Diego County were not available.

Homeowners often assume incorrectly that they are not covered for damages incurred during an earthquake, Bedoy said.

“There are some situations where a homeowner can be compensated even if he doesn’t have earthquake insurance. If your house burns down because of fires started by a quake, you can be covered. If it’s damaged by burst water pipes, you can be covered,” Bedoy said.

Rosenzweig said wood frame houses are cheaper to insure against earthquakes, while brick homes are more expensive.

On Wednesday, the day after the quake, most insurance companies imposed a 30-day moratorium in the Bay Area on the sale of earthquake policies. Jeff Beyer, a spokesman for the Farmers Insurance home office in Los Angeles, said his company’s moratorium covers 20 counties around the Bay Area.

Allstate lifted its moratorium in 17 Bay Area counties Thursday morning, Bedoy said. The company authorized its agents to begin writing new policies, but only after physically inspecting the home or vehicle to make sure there is no existing damage, she said.