Earthquake insurance: Is it worth it?

To buy or not to buy earthquake insurance.

Two weeks after Haiti's devastating temblor, that question is on the front burner again. Whether you live in St. Louis or San Francisco, it's hard to ignore that gnawing feeling in your gut that not having the insurance could mean big problems in the event of the Big One.

Many homeowners, however, still hold off on purchasing insurance; in California, only 12% of owners with homeowners' policies also have earthquake coverage. Why? Denial, for one. And cost, for another.

The average rate for a policy purchased with the California Earthquake Authority -- a publicly-managed organization that provides Californians catastrophic residential earthquake insurance -- is $722 per year. About 70% of earthquake coverage in California is underwritten by CEA. Rates vary by region (if you live in L.A. or San Francisco, prepare to write bigger checks), proximity to a fault, type of home construction and other factors.

Even if you plunk down those big bucks for the extra insurance (all "catastrophic" coverage is extra, in addition to your homeowners insurance, whether for hurricanes or quakes), you still may have to pay a great deal more if the damage is significant. CEA doesn't pay a nickel until the structural damage is higher than 15% of the home's insured value; then it pays for damage to the structure and household items up to the policy limit (make sure you have enough coverage -- many homeowners don't). Your property (land and structure) may be worth $600,000 in the marketplace, but earthquake insurance covers only the insured value of your home, as stated on your homeowner policy.