Earthquake Insurance: A Longitudinal Study of California Homeowners by Risa Palm (review)

Earthquake Insurance A Longitudinal Study of California Homeowners Risa Palm Boulder, CO: Westview Press, 1995 Reviewed by C h r ist in e M . R o d r ig u e Associate Professor, Department of Geography and Planning California State University, Chico CA 95929-0425 In Earthquake Insurance, Risa Palm offers an update ofAfter a Cali­ fornia Earthquake: Attitude and Behavior Change (Palm and Hodgson 1992). In this volume, she presents the results of a 1993 resurvey of participants in the earlier surveys of 1989 and 1990. The two books, then, report on an environmental perception study unique in querying respondents before the latest series of significant earth­ quakes in California (1989), after the Loma Prieta earthquake of 1989 (1990 resurvey), and after the 1992 implementation of a one-year state-mandated insurance policy covering small losses (1993 resurvey). Given the enormity of the seismic risk in urban California, Palm seeks to identify those factors predicting who among one subset of Californians—homeowners— will choose to reduce their hazard 191 192 APCG YEARBOOK • VOLUME 57 • 1995 vulnerability through insurance and structural and nonstructural miti­ gations. The original survey was mailed to a random sample of homeowners in two Bay Area counties (Contra Costa and Santa Clara) and two southern California counties (Los Angeles and San Bernar­ dino). The second and third surveys went to the same addresses. From these three cross-sectional surveys, a longitudinal sample was con­ structed of those individuals who had responded to all three surveys. Study responses were analyzed using logistic regression, a form of regression permitting the evaluation of ratio and interval scaled in­ dependent variables (e.g., age, income, and education) as they affect a dependent variable of binary scaling (e.g., insured vs. uninsured). With respect to noninsurance mitigations, Palm found that re­ spondents were more likely to adopt nonstructural mitigations (e.g., learning to shut off gas lines, buying an emergency kit, and strapping a water heater) than structural mitigations (e.g., foundation bolting or bracing cripple walls). Most, in fact, had adopted at least one such noninsurance mitigation by 1993. Few, however, are prepared to sur­ vive and take care of themselves in the critical first three days after a quake, despite extensive publicity. Palm found no consistency in the factors correlated with structural mitigations among the four coun­ ties, and only perceived risk helped predict the adoption of nonstructural mitigations. Those households who had adopted insur­ ance, though, were also likelier to have adopted some other mitigation in all counties except San Bernardino. Insurance as an earthquake mitigation has shown a consistent increase in all four counties during the three surveys; anywhere from over a third to over a half of all respondents in each county reported having insurance by 1993. For those who purchased such insurance, deciding factors included fear of a major quake, confidence in the insurance industry, little faith in government as a source of assis­ tance, and a belief that insurance costs (both premiums and deductibles) did not exceed the benefits. The households without RODRIGUE: Review of Earthquake Insurance 193 insurance cited its cost, their beliefs that a big quake would not sig­ nificantly damage their own homes, and a suspicion that the insurance industry could not honor claims after a serious disaster. Perceived vulnerability has increased in all four counties over the three surveys. Perception of vulnerability, however, proved un­ related to actual experience of earthquake damage, objective risk of the home site (i.e., proximity to a Special Studies Zone for surface fault ruptures), or socioeconomic and demographic characteristics. Respondents did perceive certain areas in California as more than usually vulnerable to quakes, namely, their own communities, places subjected to recent quakes, and the great population centers of Los Angeles and San Francisco. Though sample development and attrition prevent the longitudi­ nal analysis from being strictly representative of homeowners in the four counties, the longitudinal study does corroborate the three crosssectional studies. Longitudinal respondents report increases in their perceived vulnerability to quakes and have increased their use of earthquake insurance. The increased perception of vulnerability is strongly associated with insurance purchase, which proves also di­ rectly associated with both home value and income. The...