A Gentle Introduction To Earthquake Insurance Because Planning For Calamity Is Scary

With help from a friend, Tigran Daniyelyan (L) carries his television from his apartment complex that was destroyed by the Northridge earthquake on January 17, 1994. (Tim Clary/AFP/Getty Images)

Earthquakes happen in California. They're probably happening right now. They will happen again (and I don't know if you've heard, but there's a Big One coming).

Preparing for an earthquake is one thing; recovering from one is another.

Even if you have renters insurance or homeowners insurance, you might not have earthquake insurance because it's a totally separate insurance beast.

So, how does it work? Let's shake it down.

Glenn Pomeroy knows a thing or two. He's the CEO of the California Earthquake Authority — a state-created "publicly managed, privately funded" entity that provides the majority of residential earthquake insurance policies sold here.

He was on the KPCC airwaves a number of times after the Ridgecrest quakes to remind Angelenos that standard renters insurance policies and standard homeowner policies do not cover earthquake related damage.

We listened and took notes and read the CEA's FAQs. Here's what we learned.

WHAT'S EARTHQUAKE INSURANCE?

It's what it sounds like: insurance that, depending on your plan, can cover some temporary housing, living expenses, home repairs, broken items and various other losses and damages from an earthquake.

WHO OFFERS IT?

All residential property insurance companies in California have to offer earthquake insurance. Insurers can sell their own, or do what the majority of companies have done, and partner with the CEA.

CAN I GET IT WHENEVER?

Yes. You can get it any time, even if you get a letter in the mail saying there's a due date for applying, according to the CEA website.

By law, your insurer is required to send a mandatory offer letter at least every two years if you do not yet have earthquake insurance. But don't worry if you happen to miss the due date shown in your mandatory offer letter! You can still purchase a CEA policy at any time, simply by contacting your residential insurer.

You also don't have to wait until your residential policy renews in order to purchase a CEA policy.

HOW LONG UNTIL A POLICY TAKES EFFECT?

If you live in an area that hasn't had an earthquake recently, you can get a policy today and have it be effective immediately.

If you live somewhere that was recently hit by an earthquake, you have to wait. Aftershocks or other shaking related to said recent earthquake are not covered within 15 days of the initial earthquake. If a different, unrelated earthquake occurs in that timespan, however, that would be covered.

AM I REQUIRED TO HAVE IT?

No. It's not mandatory, like, say, flood insurance is for certain mortgages in high-risk areas. You can choose to purchase or not purchase earthquake insurance. The vast majority of Californians do not have earthquake insurance.

WON'T FEMA TAKE CARE OF MY HOUSE?

It's not that simple. Also it's not that likely. Listen to Episode 5 of The Big One podcast for a tangle of reasons why.

OK, SO WHAT DOES INSURANCE COVER AND WHAT DOES IT COST?

That depends on your policy.

For renters, coverage can be things like repairing or replacing belongings, hotel rooms if you have to leave home because of damage or an official order, and urgent needs like plywood to board up windows.

For homeowners, all the same things, plus damage to the actual house (and attached structures), building code upgrades if you need to rebuild, and more.

Condo dwellers and people residing in mobile homes & manufactured homes have policy options too.

The cost of said policies will vary. They're based on coverage choices, limit choices, deductible choices, the specific earthquake risk of your home's location, and other factors. The CEA has a "Premium Calculator" if you want to play with the figures.

SHOW ME THE MONEY.

Sure. Just file a claim first. Do that ASAP after an earthquake. Your insurance provider will tell you what to do next.

In the meantime, document any damage with notes and photos.

Also, save repair-related receipts and keep meticulous, dated notes detailing every correspondence you have with your insurance company.

Your insurance provider will make payments to you. The CEA will reimburse the company.

IS MY OLD HOME IN TROUBLE?

Eh... older homes, especially those built before 1980, tend to be more vulnerable since they were not built to the same construction standard that exists today. Hillside homes and homes built on soft soil in the valley are also prone to damage and collapse.

HOW CAN I IMPROVE MY CHANCES?

Retrofitting aka strengthening the foundation of your home with braces and bolts. It'll significantly reduce the chances of a home being displaced from its foundation during shaking. On average, retrofitting costs about 1 to 3 percent of a home's value, and you can get your premium lowered by retrofitting your home.

BUT I'M A RENTER. NOT MY PROBLEM.

Even though your landlord will be responsible for the building itself, earthquake insurance can be purchased on top of renter's insurance and could cover things you own, temp housing, or additional living expenses if you are displaced. Earthquake insurance for renters is also generally cheaper than it is for homeowners.

IS WATER DAMAGE PART OF THIS?

Earthquake insurance covers water damage inside the house from busted pipes or broken water heaters. Exterior flooding is not covered. Neither are swimming pools.

WHAT ABOUT THE FIRES?

Earthquakes can lead to fires, but this type of insurance does not cover that type of damage. Fire is already included in your homeowner's policy.

WHEN THE BIG ONE HITS, WILL THE CEA HAVE ENOUGH MONEY TO PAY EVERYONE?

They currently have $17 billion at the ready. The CEA's way of saying that that will likely be enough money is as follows:

CEA aims to maintain a claim-paying capacity sufficient to assure that only once in 400-to-550 years would the CEA be unable to pay 100 percent of every claim from all earthquakes occurring in one year.

Editor's note: The CEA is an underwriter for Southern California Public Radio, which owns LAist. It had no influence on the writing of this story.

Lisa Brenner and Arwen Champion-Nicks contributed to this report