American Property Casualty Insurance Association
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Jeffrey Brewer







April 17, 2014

1906 Earthquake Anniversary Should Remind Californians to Financially Prepare

SACRAMENTO, CA – On the anniversary of the Great 1906 San Francisco earthquake, the Property Casualty Insurers Association of America (PCI) is encouraging everyone to consider what it would cost to replace your household items if they were damaged or destroyed in an earthquake and then takes steps to prepare physically and financially if a natural disaster were to occur.

The 1906 San Francisco earthquake ranks as the second most expensive tremor in U.S. history, causing over $4.175 billion in insured damages, using 2012 dollars. Damages totaled $524 million at the time of the quake, killing 3000 and destroying 28,000 buildings leaving 225,000 people homeless.

“An important part of getting earthquake ready is assessing your risk and considering earthquake insurance” said Christopher Hackett, PCI director of personal lines policy. “The time to prepare family finances is before the big one hits. Consequently, it is important to understand that the standard homeowners policy does not cover losses caused by earthquakes because of the unpredictability and catastrophic impact. However earthquake insurance is available in California as a separate policy through the California Earthquake Authority and can be added to your homeowners policy in other parts of the country by talking with your agent.”

In 2012, the Uniform California Earthquake Rupture Forecast conducted the first comprehensive framework for comparing earthquake likelihoods throughout California. This is the first meaningful comparisons of earthquake probabilities in urbanized areas such as Los Angeles and the San Francisco Bay Area.  According to the new forecast, California has a 99.7 percent chance of having a magnitude 6.7 or larger earthquake during the next 30 years.  California has a 46 percent chance of having a magnitude 7.5 or larger quake in the next 30 years. 

““Earthquakes happen every day, but a major quake is a game changer,” said Hackett. “If a major quake hits a community with a large population there will be long term economic effects. “California’s take-up rate for earthquake insurance is perilously low with only 11 percent of homeowners having coverage. Rebuilding and recovering will be much harder with so few homes financially protected. This anniversary is a critical reminder to take steps now to financially prepare and purchase earthquake insurance.”

PCI’s Tips on Financially Preparing for an Earthquake

1. Conduct a yearly insurance review of your insurance policy and limits: This will help to ensure you are adequately insured and better able to withstand a catastrophic loss.

2. Talk with your insurance company or agent about additional coverages such as flood or earthquake insurance. The standard homeowners policy doesn’t cover losses resulting from floods or earthquakes.

3. Consider things you can do to reduce damage to your property: Taking action to reduce the amount of damage that may occur can reduce insurance costs and help speed the recovery process after a natural disaster.

4. Inventory your household items, and photograph or record them: An inventory lists your home’s contents so you can quickly and easily account for all of your belongings and report the loss to your insurance company.

5. Prepare for power outages, inconveniences and scams that could affect your finances: Create an emergency fund. But have some cash on hand. When the power is out you may not have the ability to pump gas, withdraw cash from an ATM or pay for things electronically.

FEMA’s Tips on Physically Preparing for an Earthquake:

1. Build an emergency kit, make a family communications plan and hold earthquake drills with your family members: Drop, cover and hold on. Locate safe spots in each room under a sturdy table or against an inside wall. Reinforce this information by moving to these places during each drill.

2. Prepare your home by storing breakable items such as bottled foods, glass, and china in low, closed cabinets with latches. Fasten heavy items such as pictures and mirrors securely to walls and away from beds, couches and anywhere people sit. Brace overhead light fixtures and top heavy objects. Store weed killers, pesticides, and flammable products securely in closed cabinets with latches.

3. Protect your house by repairing defective electrical wiring and leaky gas connections. These are potential fire risks. Get appropriate professional help. Do not work with gas or electrical lines yourself. Install flexible pipe fittings to avoid gas or water leaks. Flexible fittings are more resistant to breakage.

4. Secure your water heater, refrigerator, furnace and gas appliances by strapping them to the wall studs and bolting to the floor. If recommended by your gas company, have an automatic gas shut-off valve installed that is triggered by strong vibrations.

5. Repair any deep cracks in ceilings or foundations. Get expert advice if there are signs of structural defects. Be sure the residence is firmly anchored to its foundation.

PCI is composed of more than 1000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $195 billion in annual premium, 39 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 37 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.