I was recently surprised to realize that only about 10% of California homeowners had insurance covering damage from earthquakes. My surprise wasn't that indivi

I was recently surprised to realize that only about 10% of California homeowners had insurance covering damage from earthquakes. My surprise wasn't that individuals would decide that they couldn't afford the coverage, but that the banks holding the mortgages would not require insurance on their collateral. This got me to thinking about the financial effects of a major earthquake in the Bay Area. The estimated risk of a Magnitude 8 or greater quake in the next 30 years is about 5%.[2] With or without tsunami, I'd think that quake of this size would shut down most businesses in California for some length of time. I realize that these companies have multiple offices, but what would the effect be of having no one come to work for a week at headquarters of Google, Facebook, Apple, and Ebay? And all the other companies based in Silicon Valley? Is this risk priced into the market? Or is the sort of black swan that Taleb and others are betting their hedge funds on? [1] http://ww2.kqed.org/news/2014/08/29/is-earthquake-insurance-worth-the-cost/ http://ww2.kqed.org/news/2014/08/29/is-earthquake-insurance-... [2] http://www.mercurynews.com/science/ci_27686200/big-bay-area-quake-two-three-chance-next http://www.mercurynews.com/science/ci_27686200/big-bay-area-...