Californians know another major earthquake is coming. The only question is when.
Scientists believe that there is more than a 99 percent chance of one or more major earthquakes hitting California in the next 30 years. Yet only about 13 percent of California homeowners carry earthquake insurance. Approximately two thirds of California’s residential earthquake insurance market is served by the California Earthquake Authority, with the remaining one third served by private insurers.
That gap between the risk we face and the protection we have should concern every Californian.
The challenge is not that Californians do not understand earthquakes can happen. It is that many families struggle to justify the cost of coverage while balancing the many expenses of everyday life. Decades can pass without a major earthquake, creating a false sense of security. Combined with high premiums and significant deductibles, that leaves too many homeowners without coverage.
Earthquake insurance is expensive because earthquake risk is expensive. California law requires rates to be actuarially sound and based on the best available science. The challenge is not to ignore that reality, but to build a system that provides meaningful protection while remaining financially strong.
California learned an important lesson after the 1994 Northridge earthquake. The scale of the disaster caused many insurers to pull back from the homeowners market, prompting the creation of the California Earthquake Authority to help stabilize earthquake coverage. Nearly three decades later, that experience still offers an important lesson: we should do everything possible to prevent insurance market failures before they happen.
Affordability cannot be measured by premiums alone. Deductibles matter. Coverage matters. Families need confidence that when the ground stops shaking, the policy they purchased will actually help them rebuild.
For some homeowners, earthquake insurance comes with deductibles that can leave them responsible for tens or even hundreds of thousands of dollars before coverage begins paying for damage. Earthquake insurance is designed to protect against catastrophic losses, but we should take a fresh look at whether today’s deductible options best serve California families. Homeowners who purchase coverage should not be caught off guard by the fine print when disaster strikes.
The most effective way to make earthquake insurance more affordable is to reduce the risk itself.
California has already shown what works. Through the Earthquake Brace + Bolt program, homeowners receive grants to strengthen older homes before disaster strikes. To date, more than 39,500 California homes have been retrofitted through the program, demonstrating that investing in mitigation reduces risk before disaster strikes. We should build on that success by creating a comparable statewide wildfire home hardening initiative that helps homeowners invest in proven mitigation measures while earning meaningful insurance discounts.
The lessons from California’s earthquake insurance system extend well beyond earthquakes.
As California confronts today’s wildfire insurance crisis, we should not repeat the mistakes of the past. After Northridge, the state stepped in because the private market could no longer provide sufficient earthquake coverage. We should do everything possible to avoid a similar outcome for wildfire insurance by preserving a competitive, properly regulated insurance market.
If California is forced to take on significantly more wildfire risk, there are difficult tradeoffs. A larger public role could mean higher costs driven by catastrophic losses and reinsurance expenses, fewer choices for consumers, or greater financial exposure for taxpayers if the public assumes more of the risk. None of those outcomes should be our first choice.
Instead, we should focus on reducing wildfire risk before disaster strikes. California should build on the success of Earthquake Brace + Bolt by creating a comparable statewide wildfire home hardening initiative. Homeowners who invest in proven mitigation measures should have access to grants, low interest financing, and meaningful insurance discounts. Reducing risk makes homes safer, communities more resilient, and California a better place for insurers to compete. Over time, lower expected losses help stabilize premiums, expand consumer choice, and reduce reliance on public backstops.
We also need to do a better job educating Californians about earthquake risk. Too many homeowners mistakenly believe their standard homeowners insurance policy covers earthquake damage. It generally does not. Consumers deserve clear information so they can make informed decisions before disaster strikes.
As Insurance Commissioner, I will be guided by a simple principle: insurance should provide real peace of mind.
Whether we are preparing for earthquakes or wildfires, our responsibility is the same: reduce risk, protect consumers, and build an insurance market that is resilient enough to withstand the next disaster.
Because the next big one is not a question of if. It is a question of when. The decisions we make today will determine how well California families recover tomorrow.
That is why California must prepare now.
Ben Allen, a Democrat, is a veteran State Senator running for California Insurance Commissioner.
This story originally appeared on NYPost
