By Thomas Fuller
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Despite an aggressive advertising campaign by the state to promote earthquake insurance, only 13 percent of homeowners have it. And fewer than one out of 10 commercial buildings, which include everything from low-rise office buildings to the high-rise office towers of Los Angeles and San Francisco, are insured for earthquakes, according to the California Department of Insurance.
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California, with its multiple geological faults, has benefited from a period of seismic quiet over the past two decades — the last major earthquake struck Los Angeles in 1994 — but a small earthquake that shook parts of Los Angeles County earlier this week was a reminder of the state’s seismic vulnerability. A big earthquake is a certainty for the state, scientists say.
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With the median price of a home in California now above $500,000, estimates of the potential uncovered losses in an earthquake run into the hundreds of billions of dollars. Economists say a large earthquake could have serious repercussions for local California banks. And with one-fifth of America’s $10 trillion in mortgage debt held in California, Fannie Mae or Freddie Mac, the government mortgage finance giants that guarantee much of America’s mortgage debt, are also exposed to the risk, economists say.
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In the case of a large earthquake would the state or federal government come to the rescue?
Mr. Jones [California's Insurance Commissioner] says no.
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