What you need to know about earthquake insurance and how important it is

There are 15,000 known fault lines in Southern California, yet only about 10% of households have earthquake insurance, according to the Department of Insurance.

Standard homeowner's insurance does not cover earthquake damage. The Northridge Quake of 1994 caused $20 billion in property loss.

Does it make sense to pay thousands of dollars every year for coverage?

There is a 99% chance that an earthquake of 6.7 magnitude or higher will strike the state, according to the California Earthquake Authority. There are two ways to get coverage: through the state and through private companies.

Insurance expert Karl Susman said the cost of earthquake insurance depends on multiple factors, including the home itself, when it was built, where it's located, and whether it's bolted.

Susman said the amount you pay is largely determined by the size of your deductible. He said for a regular ranch-style home in the valley with three bedrooms and two baths, an insurance premium might be around $1,500 and $2,000 and it might have a 10 or 15% deductible.

For an $800,000 house, your deductible would be between $80,000 and 120,000, which seems to scare a lot of people away.

"We've seen larger losses from fire than earthquake, that's for sure and when that happens, there is money to pay," Susman said. "I mean, carriers have spread their risk enough where they're able to pay for their claims. Even State Farm last year, with all their financial woes, was able to step up and pay the claims that they needed to pay from the wildfire."

Susman said that if you really want coverage but think you can't afford it, you do have options.

"You can purchase your earthquake insurance a la carte. You can decide how much for the structure, how much for your personal property, how much you need to move out," Susman said. "All of those things are within your control, so you really can make it affordable if you take a little bit of time to check."

If you look at the pros and cons of earthquake insurance, the biggest pro is having money to rebuild and replace your damaged belongings. Coverage also provides for live-out expenses. There is really just one con: the expensive rates. About every $100,000 worth of coverage will cost you about $500 to $1,000 in annual premiums, according to a report by Policy Genius.

If a carrier were to run out of money in the event of a massive earthquake, the California Insurance Guarantee Association would chip in the money to cover any outstanding claims.