Here’s an interesting article about the possible effects of “the big one” (i.e. earthquake) on Los Angeles. (Hat tip.) The discussion of steel-reinforced concrete housing aside, there are some issues when one reads between the lines.
One proposal, put forth by Lucy Jones, a USGS seismologist, is to develop rating systems for homes. Currently, homes only have to meet code; however, owners who expend extra money to make their homes able to withstand larger earthquakes would be able to have a higher rating, and therefore, a higher sale value, for their homes. The response?
Democractic Los Angeles city council member Tom LaBonge said he thinks additional funding to help owners update their existing properties is more effective than a rating system.
Additional funding. So some “other person” is going to pay to upgrade your own personal home for your own personal benefit.
This gets better. When the Northridge ‘quake hit in 1994, 40% of homes had earthquake insurance; now, only 10% do.
Cost is one reason many California homeowners forgo this coverage. Deductibles can be as high as 20 percent of a home’s value.
[Glenn] Pomeroy [CEO of California Earthquake Authority] also said there is a misconception that earthquake coverage is included in a typical home insurance policy. Similar to the extra flood insurance available in areas that experience hurricanes and high waters, it usually needs to be purchased separately at an additional cost.
So 90% of California homeowners lack insurance that covers the biggest risk to their biggest asset. This is a logical response: when Hurricane Katrina hit the Gulf Coast, courts ordered insurers to cover flood damage to homes that lacked expensive flood insurance. (I wrote about this on my old blog.)