What’s new in earthquake preparedness?

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Hello, unwavering readers. On the one year anniversary of the newsletter course, we wanted to take a moment to update you on the latest developments in earthquake insurance and seismic retrofit grants, as well as the status of ShakeAlert, which may affect how you prepare for the next big earthquake.

We’ve all felt the bite of rising prices as we fill up our gas tanks and shop. But inflation could also make us more vulnerable to losses in the event of a major earthquake.

Rapidly rising costs for labor and building materials are pushing up the price of repairs to homes damaged by earthquakes. According to Assn. homebuilders, the price of materials has increased by almost 20% from April 2021 to April 2022; these costs have increased by more than 35% since the start of the pandemic.

The increase also drives up the cost of earthquake insurance, which less than one in seven California homeowners have, according to the California Earthquake Authority. (The percentage increases in areas with higher seismic risk, but even there most homeowners aren’t covered.)

The silver lining in this regard is that insurers continue to offer more flexible policies that homeowners can customize to fit their budget. But at the nonprofit CEA, the state’s largest provider of earthquake coverage, big premium increases or benefit reductions could be on the horizon.

You may be surprised to learn that so few people have insurance in a state notorious for its earthquakes. Part of the problem is that the standard homeowner’s or renter’s insurance policy does not cover damage caused by waves rippling through the earth’s crust. Instead, insurers offer consumers an optional top-up policy for earthquake risk, and this coverage can be at least as expensive as a basic home policy.

Still, GeoVera Insurance Group chief executive John Forney said he doubts price is the real issue, given the emergence of coverage options that can lower premiums. He suggested that a bigger factor was human nature, or the natural desire “to think it’s not going to happen to you”.

GeoVera is one of the few insurers offering earthquake policies; Forney said he joined the business in 1994, the year the devastating Northridge earthquake drove familiar insurance brands out of earthquake coverage. The state legislature created CEA shortly thereafter to provide basic earthquake coverage; the authority is headed by senior state officials but is privately funded.

Since then, the percentage of homes covered by earthquakes has increased slightly, in part due to awareness campaigns conducted by the CEA and the California Governor’s Office of Emergency Services. For example, CalOES held an “Earthquake Safe Spring Break” road show in April, taking a trailer with an earthquake simulator across the state to let people experience what it’s like to be caught in a major earthquake.

The message seems to be getting through, albeit slowly. Jon Christianson, chief executive of specialist insurer Palomar, said he was seeing increased awareness of earthquake insurance, with more people inquiring and showing a willingness to explore buying cover.

In recent years, insurers have found new ways to personalize coverage and potentially reduce its cost, allowing their customers to change the amount of their deductible, the value of insured property, the cost of temporary accommodation and other factors. However, the determining factor in premiums is the cost of completely rebuilding a home, which is why coverage is so expensive.

According to a ValuePenguin survey of 30 California cities, the average earthquake coverage rate is $3.54 per thousand dollars. If it costs half a million dollars to rebuild your home, at that rate your premium would be $1,770 per year. Repair costs are about 10% higher than a year ago, Christianson said, so while his company’s rates haven’t changed, a renewed policy with the same level of coverage costs about 8% more.

The CEA faces an additional problem, according to the general manager of the insurer, Glenn Pomeroy. It has so many customers – more than a million, making it the largest provider of earthquake insurance in the country – that “we cannot grow any further without imposing a large increase in premiums on our policyholders” , Pomeroy said.

This is because the cost of paying claims from a catastrophic earthquake is rising, driven by the same inflationary forces that increase the cost of rebuilding homes.

One of the things the CEA is doing, Pomeroy said, is reducing its ability to handle claims related to extremely powerful but extremely rare earthquakes. Previously, it had the ability to pay 100% of claims from an earthquake that was only expected to occur once every 400 years. It is now prepared to pay 100% of claims for a slightly less rare and less damaging 350-year earthquake, with all higher claims paid on a pro-rata basis, he said.

Another step is to improve the ability of homes to withstand the strong shaking associated with major earthquakes. Eight years ago, CEA and CalOES launched Earthquake Brace & Bolt, which has helped more than 16,000 homeowners bolt their homes to their foundations and strengthen the walls of their crawl spaces. The program is closed to new applicants at this time, but Pomeroy said it will reopen with new funding in the fall.

“We know there are about a million homes in California that need it,” Pomeroy said, referring to the seismic retrofit. By initially focusing grants on the most at-risk ZIP codes — those with the highest concentration of old homes and the greatest risk of earthquakes — “we’re making those neighborhoods safer because we’re renovating ramshackle homes,” said he declared.

The braces and bolts program provides up to $3,000 for renovations, with more money available for qualified low-income applicants – for example an additional $1,125 to $2,650 in Southern California. This is sufficient to cover much, if not all, of the cost of the work; the HomeAdvisor site estimated the cost of a seismic retrofit in January at between $3,300 and $7,500.

To receive email updates on when the next application period for Braces and Bolts grants is open, you can sign up on the program website.

Owners and residents of rental properties could also benefit from state assistance. The state budget for the fiscal year that begins July 1 could include subsidies for the renovation of small “story” apartment buildings, whose unreinforced parking areas on the ground floor make them vulnerable to collapse during a major earthquake.

Evan Reis, executive director of the US Resiliency Council, said there are about 100,000 such buildings in the state, many owned by family businesses that cannot afford the job. The cost of modernizing them, he added, is far less than the cost of building new units to replace them.

Meanwhile, work continues on ShakeAlert, the network of seismic sensors developed by the US Geological Survey, CalOES and other partners. It is designed to warn people of an earthquake before the most powerful waves reach their location.

Warnings won’t save your home if the Big One strikes, but they could give you and your family the precious seconds needed to get to safety and avoid a life-threatening injury.

Elizabeth S. Cochran, research geophysicist for the US Geological Survey, said the system is largely complete in southern California, especially Los Angeles and other urban areas. Statewide, she said, about two-thirds of the sensors have been installed, with more to come.

The additional sensors help in two ways, Cochran said: detect the onset of an earthquake more quickly and determine the epicenter and magnitude more quickly. That’s important because the goal is to alert people when they could be hit by strong shaking, not just any earthquake, she said.

ShakeAlert isn’t perfect; Cochran said he underestimated a magnitude 6 earthquake in Antelope Valley last July and overestimated a magnitude 4.7 earthquake in Truckee in May 2021, sending unnecessary alerts to parts of the Bay Area who did not feel any shock. “We were a bit embarrassed, but I think people are happy that the system is on,” she said. The comments also suggest that people are realizing that it’s difficult to immediately calculate the magnitude and location of an earthquake, Cochran said, “and maybe it’s not unexpected when we don’t quite rightly”.

The system also handled some difficult tasks well. For example, Cochran pointed to alerts sent on Dec. 20 when a pair of earthquakes hit in quick succession near Petrolia, California — a magnitude 5.7 quake offshore, then a magnitude 6.2. on land about 19 miles away. It took seismologists a few days to unpack what happened, Cochran said, but the ShakeAlert system, which sent alerts after the first tremor, “got it right during these events that most of the energy came from the earth”.

Smartphones running the Android operating system have a built-in capability to receive network alerts. There are also several apps for Android and Apple iPhones that can receive and display alerts, as well as providing additional functionality. Over the past year, Cal OES has added two enhancements to its MyShake app: one that lets users receive alerts for the base of their choice even when their phone’s location service isn’t working, and another that provides more information on what to do in the event of an incident. of a tsunami.

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