[July 31, 2008]

Quake stirs up questions on insurance

(San Gabriel Valley Tribune (CA) (KRT) Via Acquire Media NewsEdge) Jul. 31--DIAMOND BAR -- Insurance broker Gerry Heath watched on television earlier this year as workers in China struggled to dig their countrymen out of buildings flattened by May's massive earthquake there.

So a few months ago, he went down to a county office and registered the business name "Got Quake?" thinking he might use the moniker to make it easier for people in California to learn about earthquake insurance.

After a 5.4 magnitude quake hit Tuesday just a few miles from his Diamond Bar home, Heath is really starting to trust his intuition.

Heath, who works mostly with commercial customers, hopes to incorporate the "Got Quake?" name into an Internet business that quickly gets information out to potential clients.

For most people, earthquake insurance is a luxury. Only about 12 percent of California's homeowners have insurance, according to the California Earthquake Authority. There were no statistics available for the percent of earthquake-insured commercial properties.

Most people are scared off by high deductibles, which are usually about 10 percent for commercial property and 15 percent for homes. For insurance to be activated on a $500,000 building, the cost of repairs would have to exceed $75,000.

Commercial property owners usually are unaware of the seismic potential of the faults near their establishments, Heath said.

Along with getting quick insurance quotes, he hopes his site would also explain earthquake risks inherent in different regions of Southern California.

"I'm hoping I could link this to information from experts that really tell a business owner what he could be facing," said Heath.

He works for Swett and Crawford, an intermediary brokerage in Los Angeles that sells all types of insurance.

When a customer comes into a local insurance office looking for earthquake coverage, the broker often contacts a firm like Swett and Crawford to shop around for a deal, Heath said.

Swett and Crawford and the local broker split the commission, Heath said.

His company typically handles earthquake insurance for office buildings, warehouses and other large buildings.

The "Got Quake?" business model is not quite running yet, but Heath hopes to eventually expand the brand to insurance for all types of customers, maybe even homeowners, he said.

While Tuesday's earthquake near Chino Hills may lead to increased interest in earthquake insurance, there is usually a moratorium on new policies for a period after a temblor, said Jacob Taylor of Parkville Insurance in Whittier.

Taylor said most clients forego buying earthquake insurance, because, unlike fire insurance, earthquake insurance is not required by mortgage companies.

"Most people do not carry it simply because they don't have to," Taylor said.

But Tuesday's shake-up might convince a few people to start thinking about buying, he said.

A homeowner might realize his or her "home is not untouchable," he said.

Even policyholder advocacy groups say earthquake insurance is not a bad idea for people who live in earthquake country.

"I don't have any sense of any one company being better than another, but I would rather have it than not," said Alice Wolfson, who lives in San Francisco and is chairwoman of United Policyholders.

"It's good as long as you understand that it is not going to cover you for minor damages," she said.

To see more of the San Gabriel Valley Tribune, or to subscribe to the newspaper, go to http://www.sgvtribune.com.

Copyright (c) 2008, San Gabriel Valley Tribune, Calif.
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