Currently earthquake insurance policies feature a high deductible, which makes it useful if the entire property is damaged, but not so if the structure has minor damaged. Rates depend on location, construction type and a probability of an earthquake.
Previously premiums were calculated by using a collection of mass inventory data and some expert opinions. Today’s premiums are estimated using a Damage Ratio (DR), a ratio of the earthquake damage dollar amount to the total value of a building. Another method is the use of HAZUS, a computerized procedure for loss estimation.