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Californians Are In Deep Doo-doo

The longer the region goes without an earthquake, the less likely Californians are to prepare for one. A 2006 Insurance Information Network of California study found that between 60 and 69 percent of respondents across the state said that they are not prepared for the threat of a mudslide (often a consequence of earthquakes) at their homes or businesses.

The cost of earthquake insurance naturally plays a role in Californians' decisions not to buy coverage, especially in the current economic climate. A premium estimate for a 2,700-square-foot two-story wood home -- valued for insurance at $750,000 -- in the heart of San Francisco, a high-risk area, could be as high as $4,300 per year, and that's on top of a regular homeowners policy.

"Whereas that same house in the Inland Empire, near L.A., say San Bernardino or Riverside, would be half that expense," says Moraga.

The CEA has a premium estimator on its website.

The climate of earthquake insurance

Right now the earthquake insurance market in California is more competitive than ever. There are more policies available and more insurers to choose from. Some years ago the CEA was the only place to obtain earthquake insurance, but now there are more private companies offering policies. What's more, because of earthquake research, scientists are able to pinpoint higher-risk areas and thus make premiums more accurate.

The policies have also vastly improved. In the past they offered bare minimum coverage, typically with 15 percent deductibles and very limited coverage for contents and additional living expenses. "Now you can actually buy policies with 10 percent deductibles, and since July 1, the CEA started a new program called Your Choice where you can actually tailor-make policies," says Moraga.

You can choose the amount for just the structure, structure plus contents and additional living expenses or any combination of coverage based on need and finances.

Like nothing we've seen before

The financial ripple effects of a major urban area being hit by a substantial earthquake will be like nothing we have seen previously.

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