With fast, automatic payouts, an insurance startup aims to relieve inconveniences of post-quake mayhem and speed recovery for individuals and communities.
for immediate release
Berkeley, CA (web) Jan 4, 2016
Jumpstart Insurance Solutions, Inc. is challenging every aspect of conventional earthquake insurance: what it is, how it works, and who it’s for.
“After an earthquake, Jumpstart payouts will relieve nuisance losses for individuals – like extra expenses or lost income,” says founder and CEO Kate Stillwell, “And in doing so, it will be economic stimulus to speed recovery, so a city like Oakland never loses its vibrancy.”
Targeting both renters and homeowners, Jumpstart will automatically payout $10,000 to $30,000 within three days of a Magnitude 6 quake or larger, for prices of $20 to $40 per month. The catch? The quake needs to occur within 5 to 100 miles of your location – with the farther distances for the larger magnitudes.
In contrast, conventional residential quake policies cost up to 10 times more, and they come with a typical deductible of 15%, which could put a policy holder out-of-pocket hundreds of thousands of dollars before any coverage kicks in.
Stillwell continues, “Jumpstart is a low-cost way to be earthquake-prepared. Less than 10% of Californians are covered for earthquake losses, but it’s not because people don’t believe the Big One is coming. They do. It’s just that the options for financial preparation are too limited right now.”
Quake coverage is out-of-reach even for renters. Jared Funkhouser, a renter in San Francisco’s Mission district and a Jumpstart team member recalls, “When I searched for quake insurance just to cover my stuff, it would have cost six times what I currently pay for theft and fire, and that wouldn’t even reimburse lost income or living expenses like Jumpstart would.”
If a Magnitude 7.3 struck the San Francisco East Bay, Jumpstart estimates that economic losses could exceed $300 billion. We now know this scenario is possible if the Hayward and Rodgers Creek Faults rupture simultaneously.
Likewise in southern California, the Great Shakeout study estimated in 2008 that a M7.8 on the San Andreas fault could cause more than $200 billion. Of this, only about 20% ($30 to $50 billion) would be due to damaged homes and other buildings.
The largest portion will be due to “lost economic activity.” In other words, the inconvenience of mayhem: downed overpasses, school closures, ruptured sewers, delayed communication, relocation, and lost jobs – the nuisances that Jumpstart aims to relieve.
Jumpstart coverage could be available already within 2016. Stillwell explains, “The faster Jumpstart can partner with an established insurance carrier, the sooner coverage will be available. That’s why we’ve started crowdfunding – to signal customer demand to prospective insurance partners. Plus, Backers who contribute $100 earn future discounts worth $500.”
The 2014 M6.0 South Napa Earthquake provided a stark example of current underinsurance: only 35% of California Earthquake Authority (CEA) claimants received any insurance payment, according to the CEA’s Seismic Event Report to the Legislature. Total CEA payouts for that event were approximately $600,000, a bleak 0.2% of the total economic losses from that earthquake, for which estimates range between $300 million and $1 billion.
In a larger future earthquake, insufficient money flow could cause widespread flight and magnify social consequences. Now more than 10 years since Hurricane Katrina, fully 40% of then-residents left and never returned. The census population of New Orleans is now about 80% of what it was pre-Katrina, but according to an LSU study, “Nearly one quarter of the city’s residents today have moved there since Hurricane Katrina.” If a large quake caused the most-vulnerable 40% to leave Oakland, its character would change forever.
Jumpstart Insurance Solutions, Inc. is a California Benefit Corporation incorporated in November 2015.
Kate Stillwell, Founder
2625 Alcatraz Ave #295
Berkeley CA 94705