A warning for millions of uninsured homeowners in the earthquake zone: If you're expecting the government to bail you out after the big one, you're misinformed. A new program is in place to make earthquake insurance more affordable.
The Northridge earthquake struck almost 20 years ago. It damaged or destroyed about 7,000 single-family homes. The losses for those homes were about $25 billion.
"Many people mistakenly think FEMA or some other federal agency will be there to help you rebuild your home. I've got news for you: They won't be," said California Insurance Commissioner Dave Jones.
State officials held a news conference to talk about a new discount of about 7 percent for homeowners policies for people who get earthquake coverage through the Auto Club of Southern California.
"We hope that our warnings and that the discount being offered through the Auto Club will help more of our members and other homeowners not just to think about purchasing earthquake insurance, but actually to get out there and do it," said Robert Bouttier, CEO of the Automobile Club of Southern California.
Officials say about 11 percent of people who have homeowners insurance also have earthquake insurance -- a very low number.
"They are totally rolling the dice on the financial harm that will result from shake damage unless they purchase an earthquake insurance policy," said Glenn Pomeroy, CEO of the California Earthquake Authority.
Currently the discount is only through the Auto Club, but in the competitive world of insurance, officials believe it's just the beginning.
"This is a first-of-its-kind discount," said Jones. "We're hoping that others will follow suit."
