The reform of earthquake insurance is back in the news in New Zealand with an editorial in the New Zealand Herald. It argues that:
They had to make separate claims to the commission (EQC) and their private insurance company and the response was not always harmonious. Many heard from one agency that their house needed replacement and from the other that it could be repaired. Until they could get the public and private insurers to agree, nothing could be done. Since the EQC paid out readily on claims under $100,000, the least serious damage in Christchurch tended to be repaired reasonably quickly while households needing more extensive work suffered confusion and frustration.
Would you think it is a good idea that you have two car insurers if and only if your car is hit by a pink car? That’s how they run earthquake insurance in New Zealand.
This is how the system of earthquake in insurance in New Zealand would run for a car: if your car is in an accident with a pink car, the first say $2000 of the damages is paid for by a special insurer. After that, your normal car insurance policy applies.
I don’t know of anyone who insures their car with two different people depending on the probability of different events, possibly because I don’t know that many people who are extremely stupid.
In New Zealand, the first $100,000 of earthquake damage is insured by a government insurance company called the Earthquake Commission. After that, your normal homeowners insurance covers the rest of the earthquake…
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Utopia, you are standing in it! 
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