Hi John,

Some matters are basic economics, but others are not so easy to realize. As we cannot predict earthquakes yet, we only have statistics to go by and those fall a lot short of the goal. While some earthquakes may occur in an area where one suspects they might, others don't fit into that tight little box. Like the Yountville 5.2 that occurred last year. The damage was $15 million, but that's small potatoes in earthquake damage. But there were folks who had damage and without a disaster declaration issued, FEMA doesn't show up to hand out the checks.

Insofar as I am aware, and you can correct me on this one, I have not read anything which suggests that the Northridge quake was expected either. I do recall a TV special in which Lucy Jones said that prior to the quake there was oil coming out of the tops of the surrounding hills, but at the time, they didn't know what it meant.

Time is another factor. People who bought moderately sized homes in the 1970's paid about $30,000 for them. Today those same homes are valued at $275,000. Many people live in homes well in excess of $500,000. So in the world of housing $100,000 is a drop in the bucket.

Today about 60% of the population purchases earthquake insurance. That's considerably more than ever. They know just by the absence of large quakes that the chances they will need this coverage is greater now than ever. Northridge was the most costly of all quakes for the insurance industry. And yes indeed some of them didn't play by the rules. But, they won't go there again.

Petra