The 6.0-magnitude earthquake that struck Northern California on Sunday morning could cause more $1 billion in economic losses and the majority of the state's residents will be on their own when it comes to paying for damages.
California has two-thirds of the country's earthquake risk, but only 10 percent of the state's homeowners and renters have earthquake insurance, according the California Earthquake Authority, the largest earthquake insurance provider in the state.
"Some 2,000 known faults crisscross the state, producing an average of 102 earthquakes a day—more than 37,000 a year," the CEA said on its website.
Sunday's temblor—the strongest to hit the San Francisco Bay Area since 1989—destroyed homes, ruptured water and gas lines and injured at least 120 people.
Earthquake damages are generally excluded in most basic homeowners insurance polices.
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The Insurance Information Institute found that just 10 percent of homeowners in the western part of the country have earthquake insurance, compared with 22 percent last year. In total, only 7 percent have earthquake coverage, down from 10 percent a year ago.
The institute said homeowners with higher incomes are more likely to have earthquake coverage, but that figure is dwindling too.
In 2014, 11 percent of U.S. homeowners with annual incomes of $100,000 or more said they had earthquake insurance, compared with 18 percent last year, according to a recent Insurance Information Institute survey.
Meanwhile, only 2 percent of homeowners with annual incomes less than $35,000 had coverage, down from 6 percent in the year-earlier period, the survey said.
Established by the California legislature in 1996, the CEA collects about $570 million in premiums each year, but it has only paid out $3.6 million in losses since its inception, according to the Insurance Information Institute.
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In 2013, the CEA had more than 841,000 polices in force with an average premium of about $676, the California Department of Insurance said.
Earthquake policy deductibles can range anywhere from 2 percent to 20 percent of a properties replacement value and insurers in high risk states usually set minimum deductibles of about 10 percent, according to Insurance Information Institute research.
Official cost estimates from Sunday's quake are not available, but the U.S. Geological Survey said losses are likely to total more than $1 billion.
"It's still too early to know how much damage has occurred to homes in the affected area," the CEA's CEO, Glenn Pomeroy, said. "We'll have more information available to us during the next few days."
In July 2014 the USGS updated its U.S. national seismic hazard maps for the first time since 2008.
According to the updated maps, 42 states are at risk of earthquakes, with 16 considered at high risk.
—By CNBC's Karma Allen