An Earthquake story or Insurance Stinks Until You Need It!

In contemplating the recent Napa quake it got me to thinking about the earthquake we had here in Paso Robles in Dec of 2003. It was a wake up call to the city and all of us about safety and preparedness.

Now to the story! We starting receiving phone calls as soon as the lines were back up and they all had the same line in them. " Aw Shucks"  ( Fill in the appropriate language as you chose.)  We had many calls that reported earthquake damage and knew they did not carry earthquake coverage. " Is there anything we can do about this?" answer of course was no, see what FEMA offers. Oh by the way it wasn't much!  The phone calls ended " aw shucks!" as the clients were on their own.

Then we had the calls where the client had earthquake coverage. " Hi, we have some damage. What is our deductible again?" Well as you may know the deductible can vary but it is usually 10% or more. Most of the damage did not exceed the deductible and another call ended " Aw Shucks!". We again guided them to FEMA for some assistance but we were all glad they were not in the next category.

Finally the last category was the worst and the best. We had clients who had to tear down their homes and rebuild. It was the worst because the home they knew and loved was gone and the best because they had earthquake insurance. We paid to rebuild  their homes. No they did not get the full value  because of the deductible, but the homes did get rebuilt. But as you can imagine, those phone calls did not end any differently.

Earthquake insurance is designed to be catastrophic  coverage. It is designed to cover the loss that would be near impossible to recover from. If you have a mortgage on your home and most of us do, can you imagine what it would be like trying to get another loan to rebuild the home. With debt already on the property what bank is going to loan more than the value of the whole property.  So for homeowners that have equity in their properties, earthquake coverage makes the amount of the borrowing possible to manage, not pleasant but possible.

Funny side  story, I was working with a client about 20 miles from the epicenter discussing insurance including earthquake coverage. We thought we heard a sonic boom or something. I had no idea that the shock wave from the earthquake had passed under us with no motion or any indicator. When I got back to the office we had ceiling panels done and the was a lot of damage downtown. It was a total shock to me when I realized what had happened as it did not feel real. We had missed the shaking but not the aftermath.

My thought are with the residents of Napa. We have been there and know what it is like. Thanks for reading


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