California earthquake shows importance of exercising insurance options

By Lynne McChristian August 28, 2014

SACRAMENTO, CA — By now, you’ve heard there’s been a 6.0 earthquake in California, the first major quake in more than 20 years. The intensity rivaled past California quakes. I arrived in Napa on Monday afternoon, the day after the quake rattled buildings and nerves. My role here is to help spur recovery by being a resource to answer questions about the claims process and help people understand how their insurance works.

By most measures, this latest natural disaster is a moderate one. Of course, that’s not how it feels if the disaster affects you. The city of Napa is providing  status reports and so far, 116 homes have been red-tagged, meaning they are uninhabitable. And, 513 homes have been yellow-tagged, which means proceed with caution. Here’s something to put into the mix: Only about 6 percent of the homeowners in Napa buy earthquake insurance. What that means is those without insurance will have to pay for repairs and rebuilding on their own. Additionally, without earthquake insurance, a family whose home is uninhabitable won’t get reimbursed for additional living expenses that come from having to live elsewhere while a home is being rebuilt.

There are many reasons why people don’t buy optional insurance coverage, and the biggest is that too many think the translation of optional is “I don’t need this.” Another is that humans have short memories, and until we get a powerful reminder — such as a significant earthquake or epic flood — we let things slide. Yes, it’s your money that pays an insurance premium, and it’s your money that is protected when you have the right coverage and then disaster strikes.

No place in California is immune from earthquakes, and no place in Florida is immune from flooding or hurricanes. Both states have so many pluses, but never enough to outweigh the reality of paying heed to the risks.