Northridge Anniversary: Surprising Poll Results 20 Years After Costliest Earthquake in U.S. History
Comparable Quake Today Would Cause $24 Billion in Insured Losses; Those Most at Risk Don’t Buy Coverage
NEW YORK, January 13, 2014 — A recent poll by the Insurance Information Institute
(I.I.I.) found that only one out of 10 American homeowners (10 percent)
have earthquake insurance, compared with 13 percent in 2012. In western
states, 22 percent of homeowners said they have earthquake insurance,
down from 27 percent.
“When the Northridge earthquake happened 20 years ago, we estimated
that nearly 29 percent of homeowners in California had earthquake
coverage,” said Pete Moraga with the Insurance Information Network of California
(IINC). “However today, according to the California Department of
Insurance, only about 10.6 percent of homeowners have the coverage.”
“While the number of people buying earthquake insurance has
declined, the potential cost of U.S. earthquakes has been growing
because of increasing urban development in seismically active areas and
the vulnerability of older buildings, which may or may not have been
built or upgraded to current building codes,” said Dr. Robert Hartwig,
CPCU, an economist and president of the I.I.I.
The I.I.I. reports that since 1900, earthquakes have occurred in
all 50 states across the country. The August 11, 2011, quake in Mineral,
Virginia, for instance, was felt throughout much of the East Coast. And
as recently as January 9, of this year, a 5.1 magnitude earthquake off
the Cuban coast shook buildings and rattled Florida residents from the
Keys to Orlando.
The 6.7 magnitude quake, which hit Los Angeles on January 17, 1994,
was the costliest U.S. earthquake, causing $15.3 billion in insured
damages (about $24 billion in 2013 dollars). It ranks as the
fourth-costliest U.S. disaster, based on insured property losses (in
2013 dollars), topped only by Hurricane Katrina, the attacks on the
World Trade Center and Hurricane Andrew.
While there has not been a major quake on the U.S. mainland since
Northridge, California, remains the state most at risk. Powerful
earthquakes are more likely to occur in southern California than in
northern California over the next 30 years, according to a 2008 study
compiled by experts from the U.S. Geological Survey and USC’s Southern
California Earthquake Center. Six of the 10 costliest U.S. quakes, based on insured losses, were in California, according to Munich Re.
“Insurers paid out more for Northridge claims than they had
collected in earthquake insurance premiums in the preceding 30 years,”
explained Hartwig. “While the cost of insurance has increased since
Northridge, it’s important that home and business owners in California
and other vulnerable areas consider purchasing earthquake coverage,
which is the fastest and most efficient path to recovery.”
Earthquakes are not covered under standard
U.S. homeowners or business insurance policies. Coverage is usually
available for earthquake damage in the form of a supplemental policy
from private insurance companies. In California, homeowners can secure
coverage from the California Earthquake Authority
(CEA), a privately funded, publicly managed organization, established
in 1996, as well as from private insurers. The CEA does not offer
coverage for commercial, industrial or business properties.
THE TEN MOST COSTLY U.S. EARTHQUAKES (1)
($ millions)
| Insured losses (2) | |||||||
|---|---|---|---|---|---|---|---|
| Ranked by insured losses when occurred | Date | Location | Overall losses when occurred | When occurred | In 2013 dollars (3) | Fatalities | Rank based on insured losses in 2013 dollars |
| 1 | Jan. 17, 1994 | California: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange | $44,000 | $15,300 | $24,050 | 61 | 1 |
| 2 | Oct. 17, 1989 | California: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley | 10,000 | 960 | 1,800 | 68 | 3 |
| 3 | Feb. 28, 2001 | Washington: Olympia, Seattle, Tacoma; Oregon | 2,000 | 300 | 395 | 1 | 4 |
| 4 | Apr. 18, 1906 | California: San Francisco, Santa Rosa, San Jose | 524 | 180 | 4,240 (4) | 3,000 | 2 |
| 5 | Apr. 4, 2010 | California: San Diego, Calexico, El Centro, Los Angeles, Imperial; Arizona: Phoenix, Yuma | 150 | 100 | 105 | NA | 7 |
| 6 | Oct. 1-4, 1987 | California: Los Angeles, Whittier | 360 | 75 | 155 | 8 | 6 |
| 7 | Oct. 15, 2006 | Hawaii: Big Island, Kailua Kona, Oahu, Honolulu | 200 | 50 | 58 | NA | 9 |
| 8 | Sep. 3, 2000 | California: Napa | 80 | 50 | 68 | NA | 8 |
| 9 | Aug. 23, 2011 | Virginia: Mineral, Richmond; Washington DC; New York; Maryland; Baltimore |
150 | 50 | 52 | NA | 10 |
| 10 | Mar. 27-28, 1964 | Alaska: Anchorage, Kodiak Island, Seward, Valdez, Portage, Whittier, Cordova, Homer, Seldovia; Hawaii | 540 | 45 | 340 | 131 | 5 |
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