Northridge Anniversary: Surprising Poll Results 20 Years After Costliest Earthquake in U.S. History

Comparable Quake Today Would Cause $24 Billion in Insured Losses; Those Most at Risk Don't Buy Coverage
January 13, 2014

FOR IMMEDIATE RELEASE
New York Press Office: (212) 346-5500; media@iii.org

NEW YORK, January 13, 2014 — A recent poll by the Insurance Information Institute (I.I.I.) found that only one out of 10 American homeowners (10 percent) have earthquake insurance, compared with 13 percent in 2012. In western states, 22 percent of homeowners said they have earthquake insurance, down from 27 percent.
 
“When the Northridge earthquake happened 20 years ago, we estimated that nearly 29 percent of homeowners in California had earthquake coverage,” said Pete Moraga with the Insurance Information Network of California (IINC). “However today, according to the California Department of Insurance, only about 10.6 percent of homeowners have the coverage.”
 
“While the number of people buying earthquake insurance has declined, the potential cost of U.S. earthquakes has been growing because of increasing urban development in seismically active areas and the vulnerability of older buildings, which may or may not have been built or upgraded to current building codes,” said Dr. Robert Hartwig, CPCU, an economist and president of the I.I.I. 
 
The I.I.I. reports that since 1900, earthquakes have occurred in all 50 states across the country. The August 11, 2011, quake in Mineral, Virginia, for instance, was felt throughout much of the East Coast. And as recently as January 9, of this year, a 5.1 magnitude earthquake off the Cuban coast shook buildings and rattled Florida residents from the Keys to Orlando.
 
The 6.7 magnitude quake, which hit Los Angeles on January 17, 1994, was the costliest U.S. earthquake, causing $15.3 billion in insured damages (about $24 billion in 2013 dollars). It ranks as the fourth-costliest U.S. disaster, based on insured property losses (in 2013 dollars), topped only by Hurricane Katrina, the attacks on the World Trade Center and Hurricane Andrew.
 
While there has not been a major quake on the U.S. mainland since Northridge, California, remains the state most at risk. Powerful earthquakes are more likely to occur in southern California than in northern California over the next 30 years, according to a 2008 study compiled by experts from the U.S. Geological Survey and USC’s Southern California Earthquake Center. Six of the 10 costliest U.S. quakes, based on insured losses, were in California, according to Munich Re.
 
“Insurers paid out more for Northridge claims than they had collected in earthquake insurance premiums in the preceding 30 years,” explained Hartwig. “While the cost of insurance has increased since Northridge, it’s important that home and business owners in California and other vulnerable areas consider purchasing earthquake coverage, which is the fastest and most efficient path to recovery.”
 
Earthquakes are not covered under standard U.S. homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of a supplemental policy from private insurance companies. In California, homeowners can secure coverage from the California Earthquake Authority (CEA), a privately funded, publicly managed organization, established in 1996, as well as from private insurers. The CEA does not offer coverage for commercial, industrial or business properties.
 

THE TEN MOST COSTLY U.S. EARTHQUAKES BY INFLATION-ADJUSTED INSURED LOSSES (1)

($ millions)

        Insured losses (2)  
Rank Date Location Overall losses when occurred When occurred In 2013 dollars (3) Fatalities
1 Jan. 17, 1994 California: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange $44,000 $15,300 $24,050 61
2 Apr. 18, 1906 California: San Francisco, Santa Rosa, San Jose 524 180 4,240 (4) 3,000
3 Oct. 17, 1989 California: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley 10,000 960 1,800 68
4 Feb. 28, 2001 Washington: Olympia, Seattle, Tacoma; Oregon 2,000 300 395 1
5 Mar. 27-28, 1964 Alaska: Anchorage, Kodiak Island, Seward, Valdez, Portage, Whittier, Cordova, Homer, Seldovia; Hawaii; includes tsunami 540 45 340 131
6 Feb. 9, 1971 California: San Fernando Valley, Los Angeles 553 35 200 65
7 Oct. 1, 1987 California: Los Angeles, Whittier 360 75 155 8
8 Apr. 4, 2010 California: San Diego, Calexico, El Centro, Los Angeles, Imperial; Arizona: Phoenix, Yuma 150 100 105 NA
9 Sep. 3, 2000 California: Napa 80 50 68 NA
10 Jun. 28, 1992 California: San Bernardino 100 40 66 1

(1) Costliest U.S. earthquakes occurring from 1950 to 2013, based on insured losses when occurred. Includes the 1906 San Francisco, California earthquake, for which reliable insured losses are available.
(2) Based on property losses including, if applicable, agricultural, offshore, marine, aviation and National Flood Insurance Program losses in the United States and may differ from data shown elsewhere.
(3) Inflation-adjusted to 2013 dollars by Munich Re.
(4) Inflation-adjusted to 2013 dollars based on 1913 Bureau of Labor Statistics data (earliest year available).

NA=Data not available.

Source: © 2014 Munich Re, Geo Risks Research, NatCatSERVICE.

For more information about the 20th anniversary of Northridge, check out the special section of the I.I.I. website
 

RELATED LINKS

RESOURCES

The I.I.I.’s free mobile apps can help you create a disaster plan, learn about selecting the right insurance for your needs and budget, and create and maintain a home inventory. Learn more about our suite of apps here.

The I.I.I. has a full library of educational videos on its You Tube Channel. Information about I.I.I. mobile apps can be found here.
 

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