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In the wake of this week’s Baja California earthquake, San Diego’s KPBS had an interesting piece discussing why so few state residents have earthquake insurance.

[There] may be good reasons to get earthquake insurance, but there are reasons why most people decide to just take their chances. Those reasons boil down to the rarity of severe earthquakes, the cost of insurance and high deductibles.

If your house is totally destroyed by an earthquake, insurance is great. However, a typical earthquake policy has a 15 percent deductible. If you have earthquake insurance on a house that would cost $200,000 to replace, and an earthquake does damage to your home, you will have to pay $30,000 before you get your first dollar of coverage. The temblor that hit El Centro and Calexico this week will result in few insurance payouts, in light of those deductibles.

The KPBS piece continues:

State Farm insurance agent Steve Seibert works out of El Centro. He said many of his customers were upset to learn that they weren’t covered because their earthquake damage was not catastrophic.

“So when you actually have a policy and it turns out that, wow, I have to reach this deductible or certain things in the policy aren’t covered when I thought they were,” said Seibert. “That’s where it leads to the frustration.”

Seibert says that in Imperial County, a place riddled with fault lines, earthquake insurance is expensive, often in the neighborhood of $1,000 a year. For many customers that can double the amount they pay to insure their homes.

Pat Abbott is professor emeritus of geology at San Diego State and he focuses on natural disasters. He said he does not carry earthquake insurance on his home, even though coverage in San Diego can be as little as $300 a year. He said if you live in a new house that was built to code, the cost of insurance may not make sense.

“For most people they are better off spending even a few thousands of dollars strengthening their existing homes, and remove problems they have, at a cost less than the deductible on their insurance policy anyway,” said Abbott.

Pomeroy, the CEO of the California Earthquake Authority, said he recognizes the cost of insurance and the size of deductibles discourage many people from getting covered. But he said there is a move in Congress to pass loan guarantee legislation that would make it much cheaper for the earthquake authority to provide insurance, and that would make it cheaper for California homeowners to buy earthquake insurance.

Thanks to Carol Dunn for bringing the piece to my attention.