Earthquake insurance

In the past, earthquake loss was assessed using a collection of mass inventory data and was based mostly on experts' opinions.

Insurance companies devote much study and effort toward risk management to avoid such cases.

In the United States, insurance companies stop selling coverage for a few weeks after a sizeable earthquake has occurred.

Eventually the legislature created a "mini policy" that could be sold by any insurer to comply with the mandatory offer law: only earthquake loss due to structural damage need be covered, with a 15% deductible.

The legislature also created a quasi-public (privately funded, publicly managed) agency called the CEA California Earthquake Authority.

The government pays a much larger proportion of the claims if a single earthquake causes aggregate damage of over about 1 trillion yen (about US$8.75 billion).

[8] In addition to its insurance role, EQC also undertakes research and provides training and information on disaster recovery.

Coverage was eventually extended from solely earthquake and war damage to include other natural disasters such as natural landslips, volcanic eruptions, hydrothermal activity, and tsunamis, with coverage for war damage later being removed.