california homeowners - do you have earthquake insurance?

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dandinsac
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Re: california homeowners - do you have earthquake insurance?

Post by dandinsac »

I live in Sacramento and do not have earthquake insurance. I do have flood insurance, though.

temblor.net is quite interesting. While I heard about earthquakes in Oklahoma, this site really highlights it. Voltron, thanks for sharing
Zea Mays
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Re: california homeowners - do you have earthquake insurance?

Post by Zea Mays »

Hi Neighbor! We are in the same city, with wood-frame single family detached house. On a little hill with water flowing underground, some drainage issues. And we don't have quake! Why? because we were in insurance...
The policies are very expensive. We had it for a while, and our last premium was nearly $2000, ten years ago. But when we ran the numbers, including the limits and deductible, and also gave thought to the fact that if we had a claim, so would everybody else in the area, we did something different.
We had the house bolted to the foundation. Actually, in setting that up, we found we needed to repair and upgrade the foundation, a big job. But now, it's on jacks, rigged like a ship underneath, and likely to withstand a really big one.
YMMV, but I think quake is not worth what it costs.
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Zea Mays
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Re: california homeowners - do you have earthquake insurance?

Post by Zea Mays »

Sergeant wrote: "they may not pay anywhere near my policy limits if a huge earthquake wipes out their reserves. The state is not on the hook for anything and will not make you whole in the event of a loss. My policy clearly states that the CEA is not backed by the State of California."

What about Re? perhaps the US itself reinsures the flood policies, but I'm not sure. Most big insurance outfits have Reinsurance, via Zurich or Lloyds . If the quake insurer does not, as that quote seems to indicate, it's an even worse deal.
To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from wealth. Plus healthcare.
wstrdg
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Re: california homeowners - do you have earthquake insurance?

Post by wstrdg »

Palomar is an alternative to the California Earthquake Authority. You can phone them for an insurance broker in your area and get a quote.
DrGoogle2017
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Re: california homeowners - do you have earthquake insurance?

Post by DrGoogle2017 »

I have earthquake insurance for my Bay Area home for more than 20 years. It's deductible from my rent now so it makes sense to have.
For my current residence, I chose an area with 20% of its being affected, less liquid faction so I don't carry earthquake insurance on this house.
Bwise1
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Re: california homeowners - do you have earthquake insurance?

Post by Bwise1 »

Yes. Southern CA for $1100 annually.
Thos
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Re: california homeowners - do you have earthquake insurance?

Post by Thos »

After the Loma Prieta earthquake, an observant friend noted that none of the damage occurred to buildings put up after the 1972 building codes went into effect. So, if your house isn't newer than '72, upgrade - especially foundation attachments and shear walls. We live at the foot of the mountains east side of San Jose. Been through more quakes than I'd like with a house built in late 80's. Minor damage - cracked plaster, minor settling, but never had damage that would have justified the thought of a claim. Be smart though and attach tall furniture - bookcases etc to a wallstud at the top. No quake insurance here.
TxInjun
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Re: california homeowners - do you have earthquake insurance?

Post by TxInjun »

celia wrote: Sat Sep 23, 2017 3:05 am
TxInjun wrote: Fri Sep 22, 2017 5:35 pm Can California / Bay Area folks comment on how much their earthquake insurance costs them?
It doesn't make sense to compare your rates against anyone else's, except maybe your next door neighbor who bought the same kind and size of house that you did. Your rates will be higher if you have more risk, ie are closer to a faultline, how old your house is, what kind of construction it is, if it was built to earthquake standards or retrofitted, if your water heaters are strapped down, how far you are from a hydrant (fires can start if a gas line breaks).
Fair enough, I can't disagree with your points. I live in Western San Jose, between Willow Glen and Campbell. Ex-marshland. The house was a rebuild in 2014, using the 2010 Code. So I'm fairly confident the structure will stand up to most earthquakes except black-swan events.

Still, my point about asking for quote comparisons was that $3300 seems very expensive, and wanted to know if others were seeing similar prices. In my calculation, for most people, $3300 annual with a $100K+ deductible is not worth it...

TxI
boglegirl
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Re: california homeowners - do you have earthquake insurance?

Post by boglegirl »

Thos wrote: Sat Sep 23, 2017 12:37 pm After the Loma Prieta earthquake, an observant friend noted that none of the damage occurred to buildings put up after the 1972 building codes went into effect. So, if your house isn't newer than '72, upgrade - especially foundation attachments and shear walls. We live at the foot of the mountains east side of San Jose. Been through more quakes than I'd like with a house built in late 80's. Minor damage - cracked plaster, minor settling, but never had damage that would have justified the thought of a claim. Be smart though and attach tall furniture - bookcases etc to a wallstud at the top. No quake insurance here.
Interesting! My house was built in 1972. I wonder if it meets the new codes. I can envision a scenario in which the permits had already been issued and the house was completed in early 1972, under the old code, although it's also possible it was completed under the new.

I just checked my city's website, but the only permits I can find are for 1999+ changes - it doesn't look like 1972 is online. Maybe I'll head over to the city offices on Monday to see if they can look it up for me.

Of course the house has been standing for 45 years, and as far as I know, no significant damage from any of the area earthquakes.
Last edited by boglegirl on Sun Jan 07, 2018 10:43 pm, edited 1 time in total.
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tooluser
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Re: california homeowners - do you have earthquake insurance?

Post by tooluser »

dandinsac wrote: Sat Sep 23, 2017 10:31 am temblor.net is quite interesting. While I heard about earthquakes in Oklahoma, this site really highlights it. Voltron, thanks for sharing
Ditto from Los Angeles, Voltron. Assuming that site is accurate (I have no reason to believe it isn't)...

It looks like I would pay approx. 0.2% per year of the expected loss due to a total house destruction, loss of contents, and 6 months of living somewhere else. An event that is 1% probable.

Is that a reasonably good deal? I would double the cost of my homeowner's insurance to get those odds. At most I will live in earthquake country another 10 years.
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pascal
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Re: california homeowners - do you have earthquake insurance?

Post by pascal »

What is the cost of bolting down the house to the foundation? I am curious to find out what others are seeing for the cost of a retrofit
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unclescrooge
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Re: california homeowners - do you have earthquake insurance?

Post by unclescrooge »

pascal wrote: Sat Sep 23, 2017 9:46 pm What is the cost of bolting down the house to the foundation? I am curious to find out what others are seeing for the cost of a retrofit
It really depends on your house.
harrychan
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Re: california homeowners - do you have earthquake insurance?

Post by harrychan »

Live in Los Angeles.
We do not have earthquake insurance.

As many have mentioned, our lot is worth much more than our physical structure. If we do get hit with a catastrophic earthquake and we survive the quake, we will get a loan to pay for a new house. The amount of interest we will pay during the duration of the loan is going to be less than the deductible for the earthquake insurance.

If we don't survive the quake, we have term life.
This is not legal or certified financial advice but you know that already.
purpleKatz
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Re: california homeowners - do you have earthquake insurance?

Post by purpleKatz »

There's a California Residential Mitigation Program that will help with the cost of earthquake retrofits if your zip code qualifies.
https://www.earthquakebracebolt.com/Hom ... gistration
Carefreeap
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Re: california homeowners - do you have earthquake insurance?

Post by Carefreeap »

unclescrooge wrote: Sat Sep 23, 2017 4:57 am
Carefreeap wrote: Sun Jul 16, 2017 11:48 am
WarChest wrote:It's all about your home value (the actual structure) vs your land value.

In many (dare I say most?) of the major population centers, the land value exceeds the structure value. My actual house is worth something like $250k and the land is worth roughly $1.2mm. In this situation or something with a similar ratio, it makes zero sense to even consider the insurance. Now if I were to do a big remodel and increase the structure value significantly, then yeah, I'd probably carry insurance for a few years at least. Self insure later down the line when liquid net worth builds back up.
We're of the same opinion as you. Earthquake coverage excludes any land loss (a concern we would have living on a hill). Our structure is worth about $500k and we can self insure that. Our lot is worth about $1M+ because of its location and ocean view.
I'd be more worried about natural erosion than earthquakes.

I remember back in 1999 when El Nino struck southern California, a couple of ocean view properties on a hill in Malibu slid into the ocean.
We've had six houses and at least two apartment buildings in town condemned over the last two El Ninos.

But we're about a mile back from the beach. Even at a foot a year it will take a while. :wink:
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ClaycordJCA
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Re: california homeowners - do you have earthquake insurance?

Post by ClaycordJCA »

Voltron wrote: Sat Sep 23, 2017 9:16 am I have it.

Plug in your address here. Will show you the fault lines on a map like google. Very scary if live near a fault like me. Shows risk of major earthquake. App for phone is decent too.

http://temblor.net/
Thanks for the link. It shows our chance of signicant damage is high - 52/100. It's why we have earthquake insurance. Premium is about $1100 per year with a 15% deductible. A catastrophic loss is something I cannot afford given how close I am to retirement.
CWhea1775
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Re: california homeowners - do you have earthquake insurance?

Post by CWhea1775 »

We live in Oregon and have been told that before our house is even eligible for earthquake insurance it would require a retrofit (est. cost at least $15-20k). Do those of you in California not have this requirement?
vested1
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Re: california homeowners - do you have earthquake insurance?

Post by vested1 »

We have CEA insurance through AAA, purchased today at $330/year. 10% deductible, $258,000 is covered if it's not a total loss, $387,000 if we have to rebuild, which would more than cover the cost as we have family in the construction business. Our home is on a slab or we would have received a 20% discount from the insurance quote.

Using the link provided earlier we are at 27% of the 100% scale of risk for major damage due to a massive earthquake, here on the central coast of California. Due to the proximity of nearby fault lines I was surprised that our risk assessment wasn't higher.
sil2017
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Re: california homeowners - do you have earthquake insurance?

Post by sil2017 »

Using trembler.net my number was 26% of the 100% scale of risk for major damage in Orange County, CA

However, I am within a mile from the San Andreas Fault in Orange County.

I am contemplating earthquake insurance with the 25% deductible.

If you are close the the beach, earthquake insurance will not cover you should there be a tsunami as a result of the earthquake.

And there is flood insurance exclusion as well.

I really don't want to purchase both flood and earthquake so I plan to purchase earthquake for now.
Big Dog
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Re: california homeowners - do you have earthquake insurance?

Post by Big Dog »

We are CA natives, and do not have it. Our reasoning:

- 90% of the Loma Prieta claims in the Bay Area (1989) were under the deductible amount (i.e., no insurance payout was made).

- Our home is of relatively recent construction, and has a bolted foundation, double shearwall construction, etc.

- The premiums are not a good relationship to value.
Had it for 10+ years but dropped when the state got the CEA into the bidness. Deductible is just too high to provide a payout since damage to our home is most likely the chimney falling in. Moreover the temporary housing allowing is minuscule should the house become red-tagged.
denovo
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Re: california homeowners - do you have earthquake insurance?

Post by denovo »

You know, I get pretty nervous and frustrated when people here are claiming they don't need earthquake insurance unless they are certified seismologists/actuaries.


Simple argument here. If the earthquake premiums are not accurately affecting risk , why hasn't some innovative start up come into the market, drop their premiums to 10 percent below CEA, and own the entire market.
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bbrock
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Earthquake insurance worth it?

Post by bbrock »

[Thread merged into here, see below. --admin LadyGeek]

Hi Fellow Bogleheads. Hope this finds y'all doing well.

Been thinking again (re-occurs at about this time of year) if earthquake insurance is worth it. We live in CA and our primary home is in the Bay Area (Tri-Valley specifically); vaca home is in the San Bernardino Mountains of Southern CA. After browsing and running some calculations at the California Earthquake Authority website, I can get policies w/ deductibles of 25%, give me some coverage for loss of use (chosen on our primary home), personal property coverage (chosen on our primary home), and building code upgrade coverage (max of $30k chosen for ea. home). Pretty much these are catastrophic occurrence policies. As it goes, "insure the big stuff," I just wonder if this is rational. Annual premiums run $804-812 (preferred options would result in the $812 premium) for our primary home, and $672 or $710 for our vaca home (preferred options would result in the $710 premium). So, let's say combined annual premium would be $1,522 ($812 + $710).

The only big things not currently insured are disability for me. In 2014-2015 I did extensive research here and at WhitecoatInvestor.com on DI, discussed it extensively w/ a recommended agent, ran numbers/scenarios on many policies, but ultimately when I had decided on the policy, it was determined that b/c my regular work schedule is not full-time (even though I work extra shifts to be considered full time) I don't qualify. So, since then, no disability policy. Needless to say, those policies were crazy $. But I digress, the other big thing not insured is that wife and I don't have LTCi. Although, I am currently researching it and if it is wise/recommended, as well as reviewing LTCi policies that are available to us through my wife's employer, as she is a Calpers' member.

So, do you all think earthquake policies are justified? Especially all you other Californian's, do you have an earthquake policy?

FWIW, we have 100% equity on the vaca home (valued probably $300k-350k). And on our primary home, we have 70% equity on a current value at $850k.

PS: I would have included a poll, but I can't remember how to do that, or see the button to choose. So that's what I am actively trying to add below w/ the following options:
  • Get earthquake policies, await doomsday, but still have a beer.
  • Skip it, still await doomsday, and have a beer (probably two d/t upfront savings).
Edit: just searched the forum and I see the "poll option" was disabled. Oh well.
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nedsaid
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Re: Earthquake insurance worth it?

Post by nedsaid »

I am on the Board of a Homeowner's Association. We went with a new property manager almost two years ago and they strongly recommended that we purchase earthquake coverage as they do for all their clients. We followed their recommendation. I have this coverage on my individual unit policy as well.

My understanding is that some homeowners in California will take what they would have paid in premiums in order to make improvements to make their homes more earthquake resistant. When deductibles are high, it is a reasonable trade off to consider.
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TheAncientOne
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Re: Earthquake insurance worth it?

Post by TheAncientOne »

I've owned a home in the Bay Area for 35 years and have never purchased earthquake insurance. As you point out, there is a huge deductible. Let's say the value of your home, excluding land is 400K. How likely will you have damage in excess of 100K? The coverage for temporary housing and for contents damage is nice but those won't be big numbers.

During the 1989 Loma Prieta earthquake, I lived in a house in Cupertino built in the 1920s. The only damage was a cracked chimney which cost 4 or 5 thousand dollars (in 1989 dollars of course) to repair.

Where you live, most of the houses have been built in the last 30 years. If it's older than that, I'd pay for an inspector to look at your house and to recommend upgrades as necessary.
Bungo
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Re: Earthquake insurance worth it?

Post by Bungo »

I'm (hopefully) only a few years from retirement, and selling my overpriced Bay Area house is part of my retirement plan. You bet I pay for earthquake insurance. It's fairly cheap - around $1500/year - and in the unlucky event of my house being destroyed by a major earthquake, it will be the difference between being on the hook for the deductible, which I can afford without postponing my retirement plans, versus the cost of the entire structure, which would set me back a number of years.
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Re: california homeowners - do you have earthquake insurance?

Post by LadyGeek »

bbrock - I merged your thread into the on-going discussion. Also, I fixed up your post formatting codes.
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bbrock
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Re: california homeowners - do you have earthquake insurance?

Post by bbrock »

Tx LadyGeek.

I see you posted here nisiprius. I generally heed what nisiprius shares. Good input.

B
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Re: california homeowners - do you have earthquake insurance?

Post by bbrock »

I never knew about the websites temblor.com or that Earthquake Brace & Bolt (EBB) site. Those were good sites to bookmark.

For our vaca home, temblor showed a hazard of 76. For our primary home, it shows a hazard of 62. Checked the EBB site and neither zip code are listed; additionally, funding has closed for 2017. I would have to investigate if there are more included zip code zones for 2018. However, if I went the earthquake retrofit route, could that warrant foregoing a CEA policy? Is kinda of one or the other?

I re-ran CEA quotes on our primary home with a striped down policy (no personal prop coverage, no loss of use coverage, and only $10k for code upgrade coverage) the premiums are $528/yr w/ a 25% deductible ($112k), $538 w/ 20% deduct ($89,600), $788 w/ 15% dedcut ($67,200). I have not ran new quotes for our vaca home yet. I guess it is wiser to insure the home vs personal prop or loss of use since those are secondary concerns.

Here are some questions:

1. For one thing, I am now wondering if I am over or under insured on each home. I guess the best person to speak to would be a trusted contractor as far as the rebuild cost from which I could adjust my dwelling coverage accordingly. Any recommendations on how to calculate the most accurate amount for dwelling coverage?

2. When is it warranted/recommended to increase building code upgrade coverage from $10k to $20k or $30k?

3. And, it's of my belief to get the highest deductible possible to keep the lowest premiums (I mean the whole reason I would be getting this policy is b/c it is to protect against catastrophic loss). And, if I could afford the 25% deductible, shouldn't I go with that vs. a lower deductible to increase my chances of a CEA payout?
Last edited by bbrock on Tue Oct 03, 2017 1:25 pm, edited 2 times in total.
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boglerdude
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Re: california homeowners - do you have earthquake insurance?

Post by boglerdude »

After the Northridge quake some condo owners lost all their equity because the HOA decided not to rebuild.

Would loss-of-use coverage pay out in full in this scenario? Or would it only pay for the months between the quake and the forced sale of the land.
TheAncientOne
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Re: california homeowners - do you have earthquake insurance?

Post by TheAncientOne »

Regarding one issue raised, CA requires that upon sale of a property that the water heater must be strapped. Even if you've been in your house for a long time, the guys who replace your water heater, which happens after 10-15 years, will automatically strap it for you when they install the new one.

I was living in Cupertino in 1989 when Loma Prieta occurred. The community is mostly homes built in the 1960s or later. The only home in the city that was destroyed was one where an unstrapped water heater fell down and the gas line started a fire.
18_bank_accounts
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Re: california homeowners - do you have earthquake insurance?

Post by 18_bank_accounts »

I've been paying $2.5k per year for earthquake insurance in the bay area, but I'm thinking of not renewing this year. Temblor.net shows my risk as 83/100, with an incredible 1 in 7 chance of $400k in damage over the next 30 years. Makes me think that site must be funded by insurance companies. :shock:

The house does appear to be bolted to the foundation, and shear walls at ground level. We have $550k in equity. My current earthquake insurance covers $550k (coincidence), with a 15% deductible.

I'm trying to figure out how to value the structure versus the land. Zillow estimates the house at 1.3M. The county property tax valuations say the land is only worth $315k, versus $703k in improvements. But assuming we could actually build a whole new house on this lot, I would think the land value is more like $1.3M - $550k, or $750k.

One question: do you HAVE yo go through the same provider for home owners and earthquake insurance? I have Farmers for both right now, but I don't like that their website does not display earthquake policies. It makes it difficult to find the policy, pay it, etc.
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Re: california homeowners - do you have earthquake insurance?

Post by vested1 »

18_bank_accounts wrote: Sun Jan 07, 2018 7:17 pm I've been paying $2.5k per year for earthquake insurance in the bay area, but I'm thinking of not renewing this year. Temblor.net shows my risk as 83/100, with an incredible 1 in 7 chance of $400k in damage over the next 30 years. Makes me think that site must be funded by insurance companies. :shock:

The house does appear to be bolted to the foundation, and shear walls at ground level. We have $550k in equity. My current earthquake insurance covers $550k (coincidence), with a 15% deductible.

I'm trying to figure out how to value the structure versus the land. Zillow estimates the house at 1.3M. The county property tax valuations say the land is only worth $315k, versus $703k in improvements. But assuming we could actually build a whole new house on this lot, I would think the land value is more like $1.3M - $550k, or $750k.

One question: do you HAVE yo go through the same provider for home owners and earthquake insurance? I have Farmers for both right now, but I don't like that their website does not display earthquake policies. It makes it difficult to find the policy, pay it, etc.
I live in California too. Earthquake insurance is offered exclusively through the California Earthquake Authority and managed by your insurance carrier. I don't believe that earthquake damage is covered under your regular homeowner's insurance as it is considered an "Act of God". If you cancel your earthquake insurance your losses may not be covered. Check with your insurance carrier.
DrGoogle2017
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Re: california homeowners - do you have earthquake insurance?

Post by DrGoogle2017 »

My sister got $20k, out of a $200k house(1994 valuation) for the Northridge earthquake. Not a whole lot of damage to her house either, maybe crack through the fireplace. House still stands today.
Last edited by DrGoogle2017 on Sun Jan 07, 2018 9:05 pm, edited 2 times in total.
bbrock
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Re: california homeowners - do you have earthquake insurance?

Post by bbrock »

Yes, you have to purchase earthquake insurance through your homeowners insurance carrier. That is what is stated in the CEA policy booklet I have.

I called a contractor in my area as well as different insurance agents to get their opinion of what it cost price per square foot to rebuild in my area. I used an average of those #s. Then just simply take that number and multiply by your square footage, which gives you the amount of what it would cost to rebuild your house. That’s the number I used for my CEA policy.
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Re: california homeowners - do you have earthquake insurance?

Post by visualguy »

One question is whether the CEA will actually have the funds to pay policies if the big one hits the Bay Area.

The problem with earthquake insurance is that it's pretty expensive... If you aren't very close to a fault that's predicted to be likely to act up in a big way (like the Hayward fault), not sure I would bother, even though there's still definitely a risk of catastrophic damage throughout much of this area. It's a tough decision. At a few hundred dollars a year, seems reasonable. At thousands, not sure. One option is to take the maximum deductible of 25%, and give up on the insurance for personal property and living expenses. In many cases, you can bring the premiums down under $1,000 in that case.
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Re: california homeowners - do you have earthquake insurance?

Post by bbrock »

@visualguy, that was exactly my plan. I went with the highest deductible, dropped every optional coverage option (i.e. loss of use, personal property). It’s merely a policy for a catastrophic loss. $655 premium and we are in the East Bay (Tri-Valley).
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techrover
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Re: california homeowners - do you have earthquake insurance?

Post by techrover »

We live in Bay Area and do not carry earthquake insurance.
House is built in 1984 on slab foundation. To my knowledge, it meets the earthquake standards as we have never been required by our lenders to procure earthquake insurance.
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Re: california homeowners - do you have earthquake insurance?

Post by Sandi_k »

techrover wrote: Sun Jan 07, 2018 10:10 pm We live in Bay Area and do not carry earthquake insurance.
House is built in 1984 on slab foundation. To my knowledge, it meets the earthquake standards as we have never been required by our lenders to procure earthquake insurance.
Lenders cannot require that you obtain earthquake insurance, since it's an Act of God. But you'll still have to pay the mortgage if the house falls off its foundation when the Big One hits. ;)
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Re: california homeowners - do you have earthquake insurance?

Post by denovo »

visualguy wrote: Sun Jan 07, 2018 9:20 pm

The problem with earthquake insurance is that it's pretty expensive... If you aren't very close to a fault that's predicted to be likely to act up in a big way (like the Hayward fault), not sure I would bother, even though there's still definitely a risk of catastrophic damage throughout much of this area.

I would reconsider this. We don't have anywhere near perfect knowledge of all the faults that exist.

The 1994 Northridge (Los Angeles Earthquake) that cost billions in damage was caused by a fault that was undiscovered.

https://en.wikipedia.org/wiki/1994_Nort ... #Epicenter
The National Geophysical Data Center placed the hypocenter's geographical coordinates at 34°12′47″N 118°32′13″W and at a depth of 11.4 miles (18.3 km).[11] It occurred on a previously undiscovered fault, now named the Northridge blind thrust fault (also known as the Pico thrust fault).[12]
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Re: california homeowners - do you have earthquake insurance?

Post by sunny_socal »

Yes, we have it.

The deductible is huge but OTOH if our house is crushed I'd be thankful for the coverage. Here in San Diego earthquakes are rare but if San Francisco falls into the ocean we'll probably feel a jolt down here :wink:
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Re: california homeowners - do you have earthquake insurance?

Post by scifilover »

Living with the possibility of a catastrophic EQ is a reality that many of us face. I live north of Seattle in an area with significant EQ hazard. I used to live in the Bay Area and I grew up in SoCal. Both areas of significant EQ hazard.

The challenge for thinking people is that EQ's are not predictable. Tectonic plate motion happens over geologic time periods...millions of years. We have about 100 years of historic scientific knowledge, together with several hundred years of anecdotal history. Many fault lines are not known. New fault lines can appear. Each year without a great quake increases the energy stored in the fault system. When know large events happened in the past, often the population was sparse compared to today.

For a peril to be commercially insurable there must be a sufficient history of events and damages from those events so that the Law of Large Numbers can operate. This doesn't exist for the EQ peril. The CEA was created after the Northridge event proved to most companies that writing EQ insurance was a losing proposition.

The CEA is not really an insurance scheme. It is an attempt to pre-fund EQ losses and spread the cost of a large event over a number of years. The claims paying ability of the CEA (currently $15B) comes from a series of layers of funding. Some comes from accumulated reserves, some comes from re-insurance purchased on the world market, some comes from assessments that would be made against the insurance companies that joined the CEA, and some from bonds that the CEA could issue.

For events that are moderate in severity, such as another Loma Prieta, or Northridge event it should be adequate. This is partly because with a 15% deductible only structures close to the epicenter will have enough damage to receive compensation from the CEA. Another reason is that for smaller events (moment magnitude less than 7) single story frame structures are relatively strong enough to survive the shaking.

For very large events, no one knows whether or not it will be enough. There are issues with very large events. One is the possibility of a large fire event following the EQ. Depending on the moment magnitude of the EQ and the wind speed at that time, some models have shown catastrophic fire losses that potentially could be beyond the total insurance industry's claims paying ability. This is because fire following is covered for all structures even if they do not carry EQ.

Large EQ events damage water lines, disrupt communications, damage roadways and bridges, and can disrupt fire fighters' ability to respond. Fire Departments are not staffed or equipped to handle urban or suburban large fire events. Today, a single high-rise fire will result in activating mutual-aid agreements. Each broken natural gas line at a dwelling is a possible point of ignition. Santa Anna winds could create firestorms. Track housing concentrates fire load and exposure. So, if there is a large fire following event it is possible that one or more layers of the CEA's funding mechanism might not be there. All property insurance companies re-insure their catastrophe fire exposure. Unfortunately, there is only so much re-insurance capacity and some of these re-insurers are also re-insuring the CEA. And, if the primary companies, such as Allstate or State Farm cannot pay claims, then they cannot pay assessments either. Also, there is no FDIC for Property and Casualty Insurance companies. Instead, there are state guarantee funds that are funded by assessing other companies writing in the state.

We are speaking only about very large events. The very southern portion of the San Andreas from Wrightwood to the Salton Sea has not ruptured since 1680. The next most northerly portion broke in 1857.

In WA state, we have our own set of problems. While weather reduces the fire following issue to some degree, the EQ potential for damage is greater because in a subduction zone events can be larger than in the San Andreas fault zone.

With all of this in mind, I still carry EQ insurance on my WA house.
visualguy
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Re: california homeowners - do you have earthquake insurance?

Post by visualguy »

bbrock wrote: Sun Jan 07, 2018 9:58 pm @visualguy, that was exactly my plan. I went with the highest deductible, dropped every optional coverage option (i.e. loss of use, personal property). It’s merely a policy for a catastrophic loss. $655 premium and we are in the East Bay (Tri-Valley).
That's not bad. It's a bit higher in some other parts of the Bay Area. It's probably reasonable to get it at this price, although it's never an easy decision with insurance!
barnaclebob
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Re: california homeowners - do you have earthquake insurance?

Post by barnaclebob »

North Seattle area in a house with a valued rebuild cost of ~500k. Our earthquake coverage is about $1200 through loyds of london with a 5% deductible. This is not a regulated policy but I'm happy with its coverage. My understanding is that the difference is the non regulated policies don't have government backing should the insurer go belly up.

We have an older house that's not bolted to the foundation properly so the quote for an earthquake retrofit will be coming in a few days hopefully.
techrover
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Re: california homeowners - do you have earthquake insurance?

Post by techrover »

Sandi_k wrote: Mon Jan 08, 2018 12:34 am
techrover wrote: Sun Jan 07, 2018 10:10 pm We live in Bay Area and do not carry earthquake insurance.
House is built in 1984 on slab foundation. To my knowledge, it meets the earthquake standards as we have never been required by our lenders to procure earthquake insurance.
Lenders cannot require that you obtain earthquake insurance, since it's an Act of God. But you'll still have to pay the mortgage if the house falls off its foundation when the Big One hits. ;)
To my knowledge, lenders do require it based on risk though I am not sure what the criteria are - building age/geography...
Example - for my parent's properties in TX, the lenders require Windstorm, Flood besides liability.
Last edited by techrover on Wed Jan 10, 2018 6:04 pm, edited 1 time in total.
SrGrumpy
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Re: california homeowners - do you have earthquake insurance?

Post by SrGrumpy »

Voltron wrote: Sat Sep 23, 2017 9:16 am I have it.

Plug in your address here. Will show you the fault lines on a map like google. Very scary if live near a fault like me. Shows risk of major earthquake. App for phone is decent too.

http://temblor.net/
Meh. Bogus. Seismologists are discovering new faultlines all the tine, usually about 5 seconds after a quake strikes, as has been the case with recent quakes. "Oops! We had no idea about that one." The Maxwell Smarts of science.

The whole pricing scheme is extremely unfair. I hate to sound like a socialist, but the burden needs to be equal across the state. You never know if the Big One will level Lodi or Los Angeles. And for that reason, I don't have coverage. Too much for too little.
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Voltron
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Re: california homeowners - do you have earthquake insurance?

Post by Voltron »

I've paid for insurance LA area for two years in a row. about $1000. This year I am taking a break. Just a big hit. So I am rolling dice and will consider every other year.
lucky_tech_guy
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Re: california homeowners - do you have earthquake insurance?

Post by lucky_tech_guy »

I'm in the East Bay and don't have EQ insurance. Actually I'm actively against it based on the annual price and what my house is insured at.
my2p
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Re: california homeowners - do you have earthquake insurance?

Post by my2p »

Thanks for all the discussion. Just wanted to add a note here about my earthquake insurance purchase (as of July 2018) in Orange county, Southern California.

We have owned our house for two years and have built up about 35% equity now (which runs to more than $250K). Thought it's a good idea to get earthquake insurance. CEA (California Earthquake Authority) insurance is the cheapest ($200/yr), but you cannot buy it separately. You have to purchase it through your home owners insurance company. And not all home owners insurance companies can write CEA. For the full list of participating insurers, see: https://www.earthquakeauthority.com/Cal ... Earthquake

My previous insurance was with Stillwater, who is not a CEA participating insurer. So I got quotes from All State (who turned us down because of our area's fire score), State Farm, Farmers and USAA (who referred me to Homesite, since I am not a veteran. Costco' Ameriprise also redirected us to Homesite, since ours is a detached condo.) Everyone other than Farmers wanted very high premiums for the home owners insurance, so I ended up taking Farmers. I have heard State Farm's service is great, but their premium was $600/yr higher than Farmer's. I also checked with Geico (my auto insurance), but they were only giving me Stillwater and earthquake premium was $1200/yr (the same earthquake coverage that CEA gives for $200/yr).

Now, I am also moving my auto and umbrella from Geico to Farmer's, since there is discount for bundling all of them.

The whole process took me about 8 to 10 hours and then another 5 to 6 hours doing all the comparisons, talking to friends and reading online forums, over a period of about 3 weeks. So hope this helps if someone else is in my shoes!
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