In general, as either the magnitude goes up or the distance decreases, the severity of shaking increases. Those residences that are relatively close to the active fault are more likely to suffer damage, although there can be exceptions due to numerous causes. You may want to consider the quality of construction of your residence. Single-story wood frame houses generally perform well in earthquakes so long as they are properly attached to their foundation. Another factor is your personal attitude to risk and your personal financial situation.
Some people are more willing to take risks than other people.
Some people are more able to afford earthquake insurance than other people. Some people have sufficient financial resources that loss from a severe earthquake is tolerable for them. Finally, remember that not all insurance companies are the same. It may be worthwhile to shop around for the best rates or lowest deductible before purchasing your earthquake insurance. The insurance companies set the rates so that on average they will not lose money on earthquake insurance.