Earthquake Insurance? Why earthquake insurance? Revised 9/25/00
Apr 20 '00 (Updated Sep 25 '00)
To begin with, we've had earthquake insurance on both houses I've owned in California (although we was different in the two houses), and they've both suffered damage from earthquakes, but below the deductible amount. I'll also add a little more history of earthquake insurance that mrisch had, as some of it is relevant to current trends. I'll try to avoid saying the same thing he did, as I just read his review a few minutes ago. However, I completely agree with his sections on why earthquake insurance is different than other insurance, and why you should buy it.
In my first house, in 1981, (shared with someone with whom I would no longer be on speaking terms with if I knew where she was), we had comprehensive insurance with natural disaster insurance, which included earthquake insurance, but also flood insurance (unlikely) and land subsidence insurance (more likely in that particular location). The natural disaster rider cost more than the comprehensive insurance. The house (on a hillside in the El Sereno area of Los Angeles) suffered damage in the Whittier Narrows earthquake, but less than the 10% deductible. (That 10% was of the full value of the property, rather than just the structure, but it made sense under the circumstances -- if the hillside collapsed in an earthquake, the land value would also be significantly decreased.) My wife (not the person I owned the house with) and I were in the house at the time of that quake. For what it's worth, the mortgage lender was not named in the insurance, so that, if the house was essentially destroyed in an earthquake, we could have abandoned the house to the lender and walked away with the insurance proceeds. This was before the California Earthquake Authority was formed, so the insurance rates were up to the individual insurance companies, although insurers were required to offer earthquake insurance. There was no "contents" benefit to the earthquake insurance.
When my wife and I bought our first house in 1993, in Brea, we had earthquake insurance through our regular insurance company, as mrisch states, apparently through the California Earthquake Authority, although the deductible was only 10% of the structure value. However, that insurer pulled out of California after the Northridge quake, and we had to scramble to get insurance.
We now have earthquake insurance through a different company than our regular insurance company, and we had a choice of plans. One plan we had the option of taking (at about 60% more cost than the plan we actually selected) had a 10% (of structure value) deductible, with no deductible or trigger amount for contents or loss of use. The plan we finally selected has a 15% (of structure value) deductible, with 5% (of structure value) being allowed against the contents. We also had a less expensive option with the same 15% deductible, but no coverage for contents or loss of use. I think my loss-of-use clause is about the same as mrisch's; up to 1% of the structure value if the house becomes unlivable due to a quake, even if the damage is less than the 15% deductible.
Added 9/25/00: Our earthquake insurance company, Geovera, also offers at least two policies for renters. The low-end policy has $5,000 contents coverage with a $750 deductible, and $1,500 for loss of use. I haven't priced it (yet), as I've now moved into the house we own.
I don't think this insurance comes through the California Earthquake Authority; I think the company I use decided to limit its earthquake insurance coverage, and reinsure it with other insurance companies.
Unfortunately, I realize that this epinion will not as well written as mrisch's, but I have a few points where I disagree with him, and enough to say that I feel it warrants a full epinion. I fully intended to give him credit when he has stated something better than I will. (I further ask that you contact me before filing a plagiarism abuse report -- I'll try to correct the problem.)
In summary, we wouldn't buy a house in a (West) coastal State without earthquake insurance.
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Epinions.com ID:
Arthur.Rubin
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Member: Arthur Rubin
Location: Brea, CA, USA
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Expert in mathematics, computers, income tax, with a wide variety of interests.
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