You're right, Steve -- "a little bit of something is a lot better than a whole lotta nothing."

I guess that if one owns a million dollar house in California ( not uncommon these days), the decision whether or not to buy earthquake insurance revolves around how much equity you have in the house. Can you afford to roll the dice with what is probabably your most valuable asset? I guess the answer is: it depends. If it's a fairly recent mortgage and one is not that far into a 30-year amortization period, then if the house is destroyed you could always just walk away from it. (Some people in New Orleans walked away from homes that were heavily damaged.)

If you have quake insurance and the house is destroyed (say it's on soil that is prone to liquefaction or it's on a hillside and it slides down the hill), you'd have to pay the $150,000 deductible and the insurance will pay for the rest.

Then there's the alternative. If you don't have insurance, my guess is that the government will be supplying some nice low-cost LOANS to help people re-build. It won't be free money that they're handing out. With the price of homes in California and the cost to re-build, there is no way the government could afford to reimburse people outright for the damage. So on top of a mortgage that would still be ongoing, the person without insurance would have to come up with what could be a substantial sum of money to fix up his/her house -- another loan to pay back. The government might give you a trailer to live in while it's being fixed up -- maybe. And maybe that trailer might arrive in 6-8 months, if you're lucky. We've all seen how well that works.

So, even if the deductible on that million dollar house is 15%, a premium of $1-2K per year for peace of mind sounds like a more appealing option to me than the alternative possibility of having to come up with that other 85%.

Barbara