Insurance Is For Accidents: It Should Be For Everyone
Earthquake insurance Los Angeles has to offer is so stripped down that many California residents waver on whether to purchase coverage or not
. Before recent changes, homeowners in L.A. were paying remarkably high premiums for quake coverage offered through the State Government. The policies came with such high deductibles--fifteen percent--that the average, three hundred thousand dollar house would have to pay forty five thousand dollars out of pocket before the policy would kick in to pay anything.Adding insult to injury, homeowners were not covered for anything outside of the house. Landscaping, pools or other belongings not housed in the property were uncovered. All of this came from the less than generous provision of the California Earthquake Authority (CEA) that was established by the state government after the Northridge quake in 1994.
After enough complaints were lodged that the state could no longer ignore the inadequacy of Earthquake Insurance Los Angles provided, certain policies were added to make up for the deficiencies. Lower deductible options are now available along with advanced possessions coverage, but the premiums on the reworked plans are so high that few residents can afford the cost.
Two private companies also begun offering policies for earthquake insurance Los Angeles residents can purchase. In a similar situation, few people are able to afford the high monthly cost of carrying the coverage, and five out of every six households in the city opt to go without a policy at all. As long as residents perceive that it is cheaper to deal with the consequences of a potential disaster than it is to keep coverage just in case, the number of policy owners will stay low.
Currently, slightly fewer than nine hundred thousand homeowners carry insurance for earthquakes. Unexpectedly, surveys indicate that the families choosing the policies are not a common demographic ratio. Wealthy homeowners often decide to pay damages out of pocket. Low-income families, of course, cannot afford the price and the average middle class households usually opt out since they have so little equity invested in the homes they purchased with interest only loans.
That leaves a small sliver of the insurance pie to be gobbled up by elderly homeowners who own their homes outright but cannot afford to let it come tumbling down because of a natural disaster. Many residents are asking lawmakers if it is fair to offer an insurance that is only useful to retirees or people late in their working careers. In a city where homes are already among the most costly in the nation, they wonder if insurance prices should be available for everyone's protection. At the same time, insurance is not for predictable accidents, but rather for incidents that are devastating and unexpected. Californians are in a tough predicament.
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