Rubble With a Mortgage

What could be worse than a devasting earthquake in the Bay Area? The day after, when we all realize that no one is covered by insurance.

"Typically those zones are as narrow as 1,000 feet. You could be 1,000 feet from the Hayward fault and not be in the fault zone," explains Ted Stephanos, another JCP geologist. By that measure, the devastated Marina was not in the 1991 Loma Prieta earthquake's fault zone.

Similarly, a "seismic hazard zone" refers to a site likely to suffer a landslide or liquefaction -- the earth turning to jelly -- in a quake. Most of San Francisco, minus the Marina, escapes that, and so on paper, San Francisco does not seem particularly prone to earthquake damage.

A building's propensity to shake is not required to be studied or disclosed under state law, say JCP's geologists.

The 7.0 Loma Prieta quake hit the Marina hard in 1989. Despite such 
disasters, earthquake insurance remains a hard sell. Only 17 percent of 
California homeowners are covered.
Courtesy of TimePix
The 7.0 Loma Prieta quake hit the Marina hard in 1989. Despite such disasters, earthquake insurance remains a hard sell. Only 17 percent of California homeowners are covered.

"It doesn't include ground shaking," says Ransbottom. "That's true."

Isn't the ground shaking the main thing that happens in an earthquake?

"In general, yes," she says. "The shaking is the prime effect you're going to feel in an earthquake."

The Association of Bay Area Governments, notes Ransbottom, does provide this information, if you ask for it. In the end, it comes down to common sense -- houses in the Bay Area will shake. If you're thinking of buying one, it's your best guess how hard.

Nachtway, the real estate agent, herself lives in a house in the nearby hills that she says is "literally on the Hayward fault." The recent leap in housing prices puts her place at about $2.5 million if she were to sell it today. But she hasn't insured it for earthquakes.

"We had it [insurance] for a year or two, then we got rid of it because it was so expensive. A seismic engineer looked at it [the house], and because of the type of fault, we weren't at risk for injury. So we did a lot of retrofitting, everything. We bolted the structure to the foundation, did shear walls, tie-down straps. We did something a lot of people don't do and put a ball on the gas pipe so if there was a certain amount of shaking the ball would fall down and plug up the pipe [to cut off the gas and prevent an explosion]. But the insurance, we decided, didn't pay. The amount of damage we would have needed to get anything, because of the deductible, we decided to keep the money, make investments, and pay for any damage."

Nachtway heads off to give more fliers to visitors.

Jill Neilson, not buying but just checking on changes in the neighborhood, lives a few blocks away in "a big house, 3,000 square feet, three floors." She too is uninsured.

"The price is outrageous. I check every year: What's the price, what's the deductible? My partner is an accountant, so he's very good with this.

"It's $2,000 a year, a $50,000 deductible. My house was built in the 1920s, and we've done what we can. But if there was insurance, absolutely, absolutely I'd have it. But it's not realistic now."

She laughs and adjusts her sunglasses.

"I understand if there's a fire, resulting from an earthquake, you're covered."

"So start a fire?" says a friend with her.

Neilson shrugs.

"If there's a fire, say from your water heater flipping upside down, yeah. There are always a lot of mysterious fires after earthquakes," Ransbottom says later by phone.

So how do you do it, provide assurances to people that if you work hard and buy a home for your family in the Bay Area, or hold onto the family house, you won't be wiped out in 30 seconds sometime in the next 30 years? Hull suggests more tinkering with the CEA's insurance policy, and making a prayerful wish for more private insurers. Comerio suggests, a bit more concretely, requiring that insurance be part of a mortgage.

"You make it part of your lending. Add a half-percent to every mortgage and use that to pay for earthquake insurance. It's frankly only in those kinds of mechanisms that you can make it affordable, because then you spread it [the risk] over the entire population. But that's difficult. No legislator wants to put their name on it, until the day after an earthquake. And the home builders will oppose anything that adds cost."

The Legislature has made some progress, but not much.

"Some of these issues are federal," says the chair of the state Assembly's Committee on Earthquake Safety and Preparedness, Ellen Corbett (D-San Leandro). The former mayor of San Leandro, Corbett is something of an earthquake hawk in Sacramento. The state government's relatively blasé attitude toward the problem has forced her to concoct some creative tactics, she says, including passing out a map of predicted earthquake damage on the Assembly floor, color-coded by voting district. According to the map, based on information from the state Department of Conservation's Mines and Geology Division, San Francisco's 13th Assembly District has what the state statisticians call the highest "annual expected earthquake loss" in California, $297 million. The number represents, essentially, the amount of money the 13th should expect to pay for damage when an earthquake comes, averaged over a period of decades. It's a way of demonstrating different areas' relative financial exposure to earthquake damage, while accounting for the fact that damage happens randomly, and real costs could be zero one year and $20 billion the next.

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