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In California, earthquake insurance is not mandatory and is relatively expensive. Investment in earthquake insurance is one indicator of individual/household response to hazards in the urban environment. This paper reports on a series of three surveys of California homeowners undertaken in 1989, 1990, and 1993 in Contra Costa, Santa Clara, Los Angeles, and San Bernardino counties. The surveys addressed six hypotheses: rates of insurance subscription have increased; socioeconomc and demographic characteristics distinguish the insured from the uninsured; insurance purchase is systematically related to geophysical risk at the home site; perceived risk is a predictor of insurance purchase; experience with an earthquake increases perceived risk and motivates insurance purchase; and mandatory noncatastrophic insurance increases the propensity to buy nonmandatory catastrophic insurance. The surveys yielded three primary findings. First, the proportion of households subscribing to earthquake insurance increased steadily, from about 5 percent in 1973 to approximately 40 percent in Santa Clara and Los Angeles counties in 1989 and 50 percent in those counties in 1993. Second, the geographic pattern of insurance subscription has consistently been unrelated to relative geophysical risk: those in areas susceptible to high degrees of ground shaking are no more likely to purchase insurance than those in less risky areas. Third, the strongest and most consistent predictor of earthquake insurance purchase is perceived vulnerability: those who perceive that their homes or communities are likely to experience earthquake damage are more likely to purchase earthquake insurance. Future research should involve cross-cultural studies, specifically addressed at questions of the universality of the empirical relationships between personality, demographic-economic status, and insurance purchase, or, more broadly, earthquake-mitigation behavior.


Final manuscript version of article published in:

Palm, Risa. 1995. "The Roepke Lecture in Economic Geography Catastrophic Earthquake Insurance: Patterns of Adoption." Economic Geography, 71(2): 119-131. doi: 10.2307/144354.