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While earthquake insurance through the state has come down a tad recently, I have also heard that several companies offer private earthquake insurance that offer lower rates and more coverage options. Anyone done the research and have experience with other companies? Thanks. Bryan
We just received an offer of a California Earthquake Authority policy. It states that our current homeowners insurance does not provide coverage in the event of an earthquake. Is earthquake insurance necessary? I only ask because the policy is very expensive and the deductible is high. If earthquake insurance is necessary, could someone recommend who we should go through (someone reputable). Thanks in advance. Joy
In additon, be sure to secure tall heavy furniture, mirrors, etc., and other ''non-structural'' hazards that may cause damage and injury (and wouldn't be covered by EQ insurance). R.K.
Few if any insurance carriers offer anything but CEA policies for earthquake coverage and those are pretty standardized. There is a high deductible, but given the price of Bay Area real estate I think the policy is still worth having. I don't know how much pricing varies. Start by calling the carrier that has your general homeowners' policy and ask what they offer. (Ours is through USAA, which is only available to current or former members of the military and their children.) Bought the Coverage
Many people, such as myself, have made the calculation that earthquake insurance is too expensive, covers too little, and is not necessarily going to pay out should there be a massive loss. That is, the insurer may go insolvent, and it is not backed up by the federal government (as I believe flood insurance is). (Don't forget how expensive and difficult it will be to get contractors and building materials in the immediate aftermath of a quake when everybody else is doing the exact same thing.) In my opinion, a far better investment of your $1000-plus annual premium would be to improve the safety of your home's structure, particularly replacing or improving the foundation and adding shear walls. Oakland and Berkeley offer a one-time credit toward your transfer tax that can make retrofitting more financially appealing. Another good investment would be some survival supplies like bottled water, canned food, camping stoves and extra fuel to help you get by for a few days.
On the other hand, if you are sure you would need an insurance settlement (as opposed to, say, savings) to rebuild your home after it is destroyed by an earthquake, earthquake insurance is really your only option. David
I have earthquake insurance. It costs about a third more than my basic homeowners insurance. In other words, adding earthquake protection increased the cost of my total homeowners insurance by 250%. Why do I pay for it? When I bought the house, the foundation was crumbling to the point where there was no way to bolt the house to the foundation. I was afraid even a minor quake would destroy the house, leaving me with a giant mortgage and nothing to show for it. Now that I have a foundation and all the proper earthquake retrofits I still keep the insurance. Why? because the risk of a quake is so high.
Regarding purchasing earthquake insurance, this is from the California Earthquake Authority website (http://www.earthquakeauthority.com/members.html#top):
''In order to purchase a CEA earthquake insurance policy, your homeowner insurance must be issued by one of the CEA Member Insurance Companies listed below. Click on any of the company names listed below for additional contact information. Allstate Insurance Company Armed Forces Insurance Exchange California FAIR Plan CSAA Encompass Insurance (formerly CNA) Farmers Insurance Group Homesite Insurance of California Interinsurance Exchange of the Automobile Club Liberty Mutual Merastar Mercury Prudential State Farm Insurance USAA Workmen's Auto Insurance''Carrie
Earthquake Insurance - To have or not to have? Our 100 year old (+/-) brown shingle home is located in the Elmwood District off College Avenue in Berkeley. We have redone the foundation, bolted, shearwalled, etc. We have had EQ insurance since our purchase over a decade ago. As it was a fixer upper, we bought well below the market value. Given this and the increase in values in this area, we have happily seen our house value increase over the years, which means we have a lot of equity in our home. This has been the argument for paying for costly EQ insurance - that we have more to loose than the mortgage company should there be a devastating earthquake. Is this sound logic? What, beyond worry or adversity to risk, is the criteria for having an EQ policy? A few years ago the policy doubled! and the company seemed to offer less coverage. Our broker has given us the impression that if we cancel this policy we won't get another due to the age of our home. Is this true? It is getting harder to justify the expense, but then we don't want to loose on our investment. Advice greatly appreciated.
Second, IF you decide to get insurance, consider that you are insuring against complete loss; that means if the damage is only partial, probably the cost of the insurance will outweigh the risk. SO you could get a deductible of 200-300 thousand. This will bring down your premium tremendously and insure you for what you really need which is catastrophic loss. peter
Our agent is Alan Quan with Allstate. Last year we price shopped for insurance after being with Farmers for almost 7 years. Allstate had the best prices for our needs and I liked Alan's attentiveness in getting the policy written, coming to our house quickly, returning phone calls promptly, etc. His phone number is 510-581-8213.
Be prepared for sticker shock on earthquake. All earthquake insurance is provided by the State of California but you purchase it via whatever your insurance company you end up going with. The deductibles are outrageous and so are the rates. Our CEA (California Earthquake Authority) policy is actually $700 per year more than our homeowners policy. The CEA recently lowered the rates due to pressure from politicians but it only lowered our bill by a couple of hundred dollars.
We debated about whether to carry the coverage or not. Our decision came down to whether we could financially recover if we lost 100% of the equity in our house due to a catastrophic earthquake. We decided we couldn't and forked over the money.
I get upset on this topic because we had earthquake coverage through Farmers prior to the CEA and it was extremely affordable. The catch 22 back then was that you couldn't shop around for homeowners rates because insurers wouldn't accept new policies. Once the CEA took over the earthquake liability insurers agreed to write new policies in California. I've also read a lot of debate about whether the CEA would have enough money to cover losses in a catastrophic earthquake. It's also questionable how an entire area could recover from a major quake given most people have been priced out of the CEA's rates and therefore are not carrying the insurance.
I know that Amica, a highly regarded and highly rated out-of-state insurance company, offers their own earthquake insurance, which I believe provides much better coverage than offered through the CEA. However, I also know that they are very restrictive and for many years were not accepting new policy holders in CA. A friend recently told me that they currently writing new policies in CA but only for houses built fairly recently. Their # is 800-242-6422.
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