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Earthquake insurance: Expensive but worth the cost?




 General view of the Marina district disaster zone after an earthquake, measuring 7.1 on the Richter scale, rocks game three of the World Series between the Oakland A's and San Francisco Giants at Candlestick Park on October 17, 1989 in San Francisco, California.
General view of the Marina district disaster zone after an earthquake, measuring 7.1 on the Richter scale, rocks game three of the World Series between the Oakland A's and San Francisco Giants at Candlestick Park on October 17, 1989 in San Francisco, California.
Otto Greule Jr/Getty Images

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The recent earthquakes that shook Southern California also rattled the nerves of some homeowners who will be left with huge bills if a really destructive quake were to strike. Earthquake damage is not covered under regular homeowner's insurance and the vast majority of Californians don't have separate policies to protect them in case of damage to their homes.

The California Earthquake Authority estimates that 90 percent of Californians aren't covered in case of quake damage. That may be because earthquake insurance policies tend to be pricey and typically don't kick in until the homeowner has paid around 10-15 percent of the home's value in deductibles.

Most Californians aren't willing to shell out the hundreds of dollars a year, on top of a hefty deductible, to protect against the remote possibility of an earthquake causing severe damage.

So is earthquake insurance worth the cost? Why is it so expensive? If the 'Big One' does hit — will most Californians be left in financial ruin because they're not insured?

Interview Highlights

Glenn Pomeroy,  CEO of California Earthquake Authority

Kathy Kristof, Los Angeles-based personal finance columnist and contributing editor to Kiplinger's Personal Finance

To listen to this segment in its entirety, click on the "Listen Now" icon in the upper left.

Have you invested in earthquake insurance. Why or why not?