In most of the big earthquakes of the last thirty years in California, not that many structures were complete losses. Fires pose a much bigger risk to structures. Most earthquake damage is to the contents of a home (t.v.’s, dishes, furniture toppling breaking the china, etc.). The 12.5 billion price tag associated with the Northridge quake was primarily to infrastructure (roads, pipes, etc). Vacant houses should be fine. Those banks are losing more than that on bad loans.

Most people don’t get earthquake insurance because it blows. It usually has a percentage deductable, not a fixed dollar amount unless it’s an old policy. A 10% deductable on a 500k house is a 50k deductable. If you have more than 50k in damage and you do have insurance you will pony up 50k and live on a street of vacant houses, because nobody else will live there. Then your value will fall further. Unless you have a significant amount of equity, it’s not a good bet. If it was a real risk percentage wise, your lender would mandate the coverage. The reality is that there are probably more people that have won the lottery in California than have completely lost a house to an Earthquake. They draw the lottery numbers 208 times a year, we dont average 208 houses lost to an earthquake per year.