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If you don't buy earthquake insurance, can you count on state or federal disaster relief programs to pay for reconstruction? [Edit] Or to rephrase the question

If you don't buy earthquake insurance, can you count on state or federal disaster relief programs to pay for reconstruction? [Edit] Or to rephrase the question, do disaster relief programs create a moral hazard that should be countered by making earthquake insurance in high-risk areas mandatory (with possible subsidies by the state)?

blaze33 13y ago
The wikipedia page of the 1906 earthquake[1] is quite instructive: > Capt. Leonard D. Wildman of the U.S. Army Signal Corps reported that he "was stopped by a fireman who told me that people in that neighborhood were firing their houses…they were told that they would not get their insurance on buildings damaged by the earthquake unless they were damaged by fire". [1] http://en.wikipedia.org/wiki/1906_San_Francisco_earthquake#Subsequent_fires http://en.wikipedia.org/wiki/1906_San_Francisco_earthquake#S...
- ekianjo 13y ago
  Well in 1906 the US were not really the welfare States they have become (turning point after the 1960s).
- Spooky23 13y ago
  The issue wasn't that simple. The Army marched in and pretty much went rogue -- they came in and started blowing up buildings to create firebreaks and caused more fires in the process. The city was also particularly vulnerable to destruction from fire. Lots of unstable landfill, the water used for fire fighting was in underground cisterns that were damaged, and key firefighting personnel were killed. There's a recent book "San Francisco is Burning" that is a really good account.
biesnecker 13y ago
It's hard to imagine private insurance companies being able to actually pay out their obligations in the event of a massive earthquake in any metropolitan American city. Federal (and to a smaller degree, state) governments will almost certainly put up most of the money for recovery and rebuilding.
- endersshadow 13y ago
  It's time for you to learn about reinsurance: https://en.wikipedia.org/wiki/Reinsurance https://en.wikipedia.org/wiki/Reinsurance
  - elpool2 13y ago
    I wonder how much damage it would take to bankrupt even the reinsurers. Would a hurricane Katrina sized disaster hitting every city from SF to Vancouver do it?
mathattack 13y ago
There is most definitely a moral hazard. Look at parts of Florida that have to be rebuilt year over year at the federal government's expense.

blaze33 13y ago

The wikipedia page of the 1906 earthquake[1] is quite instructive: > Capt. Leonard D. Wildman of the U.S. Army Signal Corps reported that he "was stopped by a fireman who told me that people in that neighborhood were firing their houses…they were told that they would not get their insurance on buildings damaged by the earthquake unless they were damaged by fire". [1] http://en.wikipedia.org/wiki/1906_San_Francisco_earthquake#Subsequent_fires http://en.wikipedia.org/wiki/1906_San_Francisco_earthquake#S...

ekianjo 13y ago
Well in 1906 the US were not really the welfare States they have become (turning point after the 1960s).
Spooky23 13y ago
The issue wasn't that simple. The Army marched in and pretty much went rogue -- they came in and started blowing up buildings to create firebreaks and caused more fires in the process. The city was also particularly vulnerable to destruction from fire. Lots of unstable landfill, the water used for fire fighting was in underground cisterns that were damaged, and key firefighting personnel were killed. There's a recent book "San Francisco is Burning" that is a really good account.

biesnecker 13y ago

It's hard to imagine private insurance companies being able to actually pay out their obligations in the event of a massive earthquake in any metropolitan American city. Federal (and to a smaller degree, state) governments will almost certainly put up most of the money for recovery and rebuilding.

endersshadow 13y ago
It's time for you to learn about reinsurance: https://en.wikipedia.org/wiki/Reinsurance https://en.wikipedia.org/wiki/Reinsurance
- elpool2 13y ago
  I wonder how much damage it would take to bankrupt even the reinsurers. Would a hurricane Katrina sized disaster hitting every city from SF to Vancouver do it?

mathattack 13y ago

There is most definitely a moral hazard. Look at parts of Florida that have to be rebuilt year over year at the federal government's expense.