Prior to 1994, approximately 28% of Californians carried earthquake insurance. Traditional policies carried a 10% deductible and provided unlimited coverage for contents and additional living expenses. The policies were offered by the homeowner insurer, and sold as an endorsement to the homeowner insurance policy.

On January 17, 1994, the Northridge earthquake shook Southern California. The magnitude 6.7 quake caused an estimated $15 billion dollars in insured damage – more than anyone expected from an earthquake of that size.

The insurance industry sustained dramatic losses, paying out more in Northridge claims than it had collected in earthquake insurance premium in the preceding 30 years!

While no licensed insurer went insolvent due to the catastrophe, some came very close.