Caps,  I work for a TV station here in Seattle and we did a story on Allstate cancelling earthquake insurance.  Here is their statement which was posted on another News station's website.....
(I don't have Allstate myself, but if I did, I'd drop em like a hot potato.)
 

Allstate Statement Regarding Earthquake Insurance:
As a part of Allstate’s property catastrophe management strategy, effective March 6, 2006 in Washington state, Allstate no longer offers the optional earthquake coverage on new and existing personal and commercial line property insurance policies. This action impacts only the optional earthquake coverage and has no impact on remaining coverages under an Allstate homeowner’s policy.

Current Allstate customers in Washington impacted by this action have the opportunity to work with their Allstate agent to obtain earthquake coverage through GeoVera, a specialty insurance company for earthquake insurance protection, which utilizes a sophisticated pricing system.

Allstate has taken this action because of the company’s desire to reduce its exposure to catastrophic loss, which includes earthquakes and hurricanes.