Earthquake insurance deductibles are so high most claims don't cover repairs

Only about 10-13% of California homeowners carry earthquake insurance, largely because the California Earthquake Authority's deductible structure makes policies feel like a bad deal. The lowest available deductible is 5% of the dwelling coverage, but for homes valued over $1 million or pre-1980 homes on raised foundations, the minimum deductible jumps to 15%. On a $800,000 home with a 15% deductible, a homeowner must absorb $120,000 in damage before insurance pays anything. Most earthquake damage falls below this threshold: cracked foundations, broken chimneys, damaged retaining walls, and cosmetic damage that costs $30,000-$80,000 to repair. So homeowners pay $1,200-$2,700 per year in premiums for a policy that would only activate in a near-total-loss scenario. This creates a coverage gap where the vast majority of earthquake damage is uninsured and uninsurable at reasonable cost. Homeowners who cannot afford repairs defer them, leading to progressive structural deterioration. The problem persists because earthquake risk is genuinely difficult to price actuarially, the CEA must maintain reserves for catastrophic events, and offering lower deductibles would require premiums so high that even fewer people would buy policies.