By Elise Linscott
The Pacific Northwest sits on many unstable seismic fault lines, and residents living and working in this region have known about the possibility of a major earthquake for years. Still, the July New Yorker article about “the big one” struck fear into the hearts of many. But was it enough to convince people to take action and protect their investments?
The level of interest in earthquake insurance has peaked in the weeks following, according to industry executives. Still, it hasn’t been enough to sell the majority of property owners on earthquake insurance.
“There has been an increase in interest and rate quotations (for earthquake insurance),” said Karl Newman, president of the Northwest Insurance Council. “After a major event like the Japan earthquake and tsunami or due to increased awareness like we’re seeing from the New Yorker article, there are some additional policies purchased. Historically, in spite of the risk, the percentage of homeowners with earthquake insurance has stayed relatively low at 15 percent or less in Washington State.”
Insurance Business America reported in late July that only 10-15 percent of properties in the area are insured and that the New Yorker article had done little, if anything, to encourage property owners to purchase earthquake insurance policies. Weeks later, it seems that still, not much has changed.
A spokesperson for Ballard Realty Inc., a Seattle-based property management group that manages about 100 properties in the area with 1,000 units total, said that none of the property owners they work with mentioned wanting to retrofit buildings or purchase earthquake insurance, or make any changes to their properties in preparation for an earthquake.
Many property owners cite high premiums costs as a main deterrent for buying these policies. Newman thinks the benefits of the insurance policies, particularly to the most vulnerable structures, outweigh the costs.
“Earthquake insurance is only expensive compared to homeowners insurance,” Newman said. “For a wood-frame home, the cost for earthquake insurance can be equal to the cost for homeowners insurance. Combined with homeowners insurance, it can double the cost to insure your home. However, even that cost is typically less than the cost to insure two cars for a year with full coverage and less than the monthly cost for health insurance for a family of four. For most of us, our home is our most valuable asset, so Northwest Insurance Council recommends that everyone in an earthquake zone consider purchasing earthquake insurance.”
There are steps property owners can take to lower earthquake premiums. Taking a higher deductible, retrofitting older structures (bolting the frame to the foundation), and owning a wood-frame building will all lower premiums. The most at-risk for earthquake damage (and therefore the most expensive to insure) are unreinforced masonry buildings, including brick, concrete and concrete block structures, Newman said.
