The single statewide rate is based on an historical study by the Pacific Fire Rating Bureau. The territorial rating structure dates from the late 1970's. Individual company decisions to follow one method over the other are based on various factors unique to each company. The deductible is an important consideration in earthquake insurance. In particular, it should be noted that the deductible applies as a percentage of the amount of insurance, or limit of liability, rather than a percentage of the amount of the loss.
Some insurers offer higher deductible percentages for a reduction in premium.
Another unique element of the earthquake deductible is that, in most cases, it applies to each coverage separately. There is a high element of adverse selection in earthquake insurance. Exposure to earthquake is location-specific whereas exposure to fire is universal. Usually, only those risks that perceive themselves to be located in a high-risk area consider purchasing earthquake insurance. Another unique element of earthquake insurance is that most insurers require a waiting period, usually from 10 to 30 days, before they will bind coverage for a new applicant.