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[SEAOC] CA earthquake insurance rates for 1997[Subject Prev][Subject Next][Thread Prev][Thread Next]
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- Subject: [SEAOC] CA earthquake insurance rates for 1997
- From: HARRISENGR(--nospam--at)aol.com
- Date: Fri, 29 Nov 1996 23:38:40 -0500
The local section of the Fri L.A . times had a story on a homeowner in Ventura that had his earthquake insurance rate increase from $300 to $2200 per year. He is one of the first of a coming wave of protests since rates for this area are $5.50 per $1000.00 of insured value with the new CA earthquake authority. I believe this is an opportunity for engineers to educate the public and insurance companies and protect the public from earthquake exposure. It is not fair for all types of houses to be lumped into a single risk category. A new house built to the L.A. city wood frame requirements with structural observation by the engineer of record should be expected to perform better than a ten year old house that used standard framing, drywall shear panels, 3.5 to 1 height to width ratio 3/8" plywood shear walls , and no site vist by the engineer of record. Also , different configurations are more or less likely to have damage: large amounts of windows, split levels, heavy roof, etc. In comparison to car insurance, the car insurance rate is adjusted depending on area, cost, as well as car type ( Ford Taurus vs, Porsche). The insurance companies now have earthquake rate areas but have no system to rate house types. Thats were engineers are needed instead of adjusters in Indiana ( according to the article the rates are based on someone there). I have been contacted by homeowners of small insurance companies over the last year saying that if an engineer provided a report the rates would remain the same and not double ( i imagine this assumes a favorable report ) . Since the increase amounts are so large, i believe it is now feasable to provide a report to reduce rates for houses of good construction techniques, especially when comparing the increase over the life of the house or even a decade:in the newspaper example $1900 per year: (2200.-300.)10years=$19,000/decade + increases. versus a one time report for say $500 to $3000 depending on type, size of house. So if the rate went up only 50% (950 ) , the owner would make this up in the first to third year or so and save after that . The insurance company could benefit by more accurately predicting risks and more people will buy insurance. The newspaper example is for a $500,000. house and a more typical 200,000 to 300,000. average for this area would take longer to make up the costs for an engineering report. On area that concerns me is that the higher deductibles( 15% ), lower interior coverage and living expenses ($5000. each ) are way above what most people can cover themselves, especially if the are out of the house for 6 to 12 months while it is being rebuilt. The above example would be $75,000 + 6mo.($2000) + contents over $5000.=over $87,000.. I guess we assume the federal goverment will bail us out again. Actually i expect a much smaller percentage to buy insurance at the higher rates partly because of this. Overall , my thought is that engineering expertise can benifit this situation and promote the engineering profession by helping people get a fair insurance rate. We will be hearing much more on this issue as people get their renewals over 1997 and we should be prepared to help with suggestions and solutions. I would value suggestions on how to implement this idea. Please post your thoughts on this issue. Tom Harris , SE Thousand Oaks, CA ...
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