As Californians rocked by the recent quakes seek coverage, they’re finding sky-high premiums.
Across California, consumers have been watching earthquake insurance rates increasing. The reason is that the latest premiums calculations include forecasts of how large future quakes will be and where the worst ones will strike.
This is terrible news for many people who were looking to renew or purchase policies.
Current predictions suggest that about 250,000 current policyholders will experience increased earthquake insurance rates. Many of the property owners in Southern California may see their premiums increase by double or triple what they would have been not too long ago. The news isn’t any better for individuals currently shopping for new policies.
The reason for the sharply rising rates isn’t exclusively because of the earthquakes that struck Ridgecrest, California on Independence Day and the day after. Those quakes reached magnitudes of 6.4 on July 4 and 7.1 on July 5. Those tremors caused severe damages but no fatalities or injuries. The estimated insurance payouts for homes and businesses are estimated to be under $1 billion. They, however, aren’t the reported reason that premiums are rising.
Instead, earthquake insurance rates are increasing due to predictions of upcoming powerful tremors.
Geological evidence indicates that the quakes in early July aren’t the end of the tremors in California. Instead, scientific predictions show that there are more powerful quakes that are likely to hit the state.
The Uniform California Earthquake Rupture Forecast (UCERF3) is a long-term tremor risk study. It revealed some predictions that the ground could continue its shaking in some areas of Southern California.
UCERF3 showed that there is a lower likelihood that Northern California will experience the “Big One” than Southern California. It pointed specifically to Los Angeles as an area of high danger risk.
Earthquake insurance rates are rising to reflect the changing seismic risks throughout California. To take a closer look at what homeowners in the region are paying, consider that Sacramento residents are paying premiums as low as $300 per year, but Los Angeles residents pay an average of $2,000 per year for the same coverage. Premiums in both places may soon be on the rise from those points.