What’s new in earthquake preparedness?

Hello, Unshaken readers. At the newsletter course’s one-year anniversary, we wanted to take a moment to update you on the latest developments in quake insurance and seismic retrofitting grants, as well as the status of ShakeAlert, which could affect how you prepare for the next big quake.

We’ve all felt the bite of rising prices when we fill up our gas tanks and go grocery shopping. But inflation could also be making us more vulnerable to loss in the event of a major earthquake.

The rapidly rising costs of labor and construction materials are pushing up the price tag for repairs to houses damaged by quakes. According to the National Assn. of Home Builders, the price of materials climbed almost 20% from April 2021 to April 2022; those costs are up more than 35% since the start of the pandemic.

That increase is also driving up the cost of earthquake insurance, which fewer than 1 in 7 California homeowners have purchased, according to the California Earthquake Authority. (The percentage increases in areas with higher earthquake risk, but even there, most homeowners are not covered.)

The glimmer of hope on that front is that insurers continue to offer more flexible policies that homeowners can customize to fit their budgets. But at the nonprofit CEA, the state’s largest provider of earthquake coverage, big increases in premiums or cuts in benefits may be on the horizon.

It might surprise you to hear that so few people have insurance in a state famous for earthquakes. Part of the issue is that the standard homeowner or renter insurance policy doesn’t cover damage caused by waves rippling through the Earth’s crust. Instead, insurers offer consumers an optional add-on policy for earthquake risks, and that coverage can be at least as expensive as a basic home policy.

Still, GeoVera Insurance Group Chief Executive John Forney said he doubted that price was the real issue, given the emergence of coverage options that can bring premiums down. 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 a small number of insurers offering earthquake policies; Forney said it got into the business in 1994, the year the devastating Northridge earthquake drove familiar insurance brands out of quake coverage. The state Legislature created the CEA shortly thereafter to provide basic earthquake coverage; the authority is governed by top state officials but is privately funded.

Since then, the percentage of homes with earthquake coverage has inched higher, thanks in part to the awareness campaigns run by the CEA and the California Governor’s Office of Emergency Services. For example, CalOES did an “Earthquake Safe Spring Break” road show in April, taking a trailer with a quake simulator across the state to let people experience what it feels like to be caught in a major quake.

The message seems to be getting through, albeit slowly. Jon Christianson, president of specialty insurer Palomar, said he was seeing an increased awareness of earthquake insurance, with more people inquiring about and showing a willingness to explore buying coverage.

Over the last several years, insurers have come up with more ways to customize coverage and potentially decrease its cost, allowing their customers to alter the size of their deductible, the value of the possessions insured, the cost of temporary housing and other factors. Nevertheless, the driving factor in premiums is the cost of totally rebuilding a home, which is why coverage is so pricey.

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

The CEA is running into an additional problem, according to the insurer’s chief executive, Glenn Pomeroy. It has so many customers — more than 1 million, making it the largest provider of quake insurance in the country — that “we can’t grow much more without imposing a large premium increase on our policyholders,” Pomeroy said.

That’s because the cost of paying the claims from a catastrophic quake is rising, driven by the same inflationary forces that are increasing the cost of rebuilding homes.

One thing the CEA is doing, Pomeroy said, is reducing its ability to handle claims from extremely powerful but exceedingly rare earthquakes. It used to have the ability to pay 100% of the claims from a quake projected to happen only once every 400 years. Now it’s set to pay 100% of the claims for a somewhat less rare and less damaging 1-in-350-years quake, with any claims above that paid on a prorated basis, he said.

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

“We know there’s like a million homes in California that need it,” Pomeroy said, referring to seismic retrofitting. By focusing the grants initially on the highest-risk ZIP Codes — the ones with the highest concentration of old homes and the largest earthquake risk — “we’re making those neighborhoods safer because we’re renovating rickety homes,” he said.

The brace and bolt program provides up to $3,000 for retrofits, with more money available to qualified low-income applicants — for example an additional $1,125 to $2,650 in Southern California. That’s enough to cover much, if not all, of the cost of the work; the site HomeAdvisor estimated the cost of a seismic retrofit in January at $3,300 to $7,500.

To be emailed updates about when the next application period opens for brace and bolt grants, you can sign up at the program’s website.

Owners and residents of rental properties could be getting some help from the state too. The state’s budget for the fiscal year that begins July 1 could include money for grants to retrofit small “soft-story” apartment buildings, whose unreinforced parking areas on their ground floors make them vulnerable to collapsing in a major quake.

Evan Reis, executive director of the U.S. Resiliency Council, said there were about 100,000 of these buildings in the state, many of them owned by mom-and-pop businesses that can’t afford to do the work. The cost of retrofitting 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 U.S. Geological Survey, CalOES and other partners. It’s designed to warn people about a quake before the most powerful waves reach their location.

The warnings aren’t going to save your house if the Big One hits, but they could give you and your family the precious seconds needed to take cover and avoid a potentially fatal injury.

Elizabeth S. Cochran, a research geophysicist for the U.S. Geological Survey, said the system was largely completed in Southern California, particularly in Los Angeles and other urban areas. Statewide, she said, about two-thirds of the sensors have been installed, with more coming.

The additional sensors help in two ways, Cochran said: detecting the start of a quake faster, and more quickly determining the epicenter and the magnitude. That’s important because the goal is to alert people when they could be hit by strong shaking, not just any quake, she said.

ShakeAlert isn’t perfect; Cochran said it underestimated a magnitude 6 quake in Antelope Valley last July and overestimated a magnitude 4.7 quake in Truckee in May 2021, sending unnecessary alerts to parts of the Bay Area that didn’t feel any shaking. “We were a little embarrassed, but I think people are excited that the system is on,” she said. The feedback also suggests that people realize it’s difficult to immediately calculate the magnitude and location of a quake, Cochran said, “and that it’s perhaps not unexpected when we don’t quite get things right.”

The system has also handled some tough tasks well. For example, Cochran pointed to the alerts sent out Dec. 20 when a pair of earthquakes hit in quick succession near Petrolia, Calif. — a magnitude 5.7 quake offshore, and 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 temblor, “appropriately figured out during these events that most of the energy was coming from onshore.”

Smartphones running the Android operating system have a built-in ability to receive alerts from the network. There are also several apps for both Android and Apple iPhones that can receive and display the alerts, while providing some extra features. Over the last year, Cal OES added two enhancements to the MyShake app developed by UC Berkeley: one that lets users receive alerts for their chosen home base even when their phone’s location service isn’t working, and another that provides more information on what to do in the event of a tsunami.