Author Topic: CA Mustachians: Do you have earthquake insurance?  (Read 4382 times)

Tuskalusa

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CA Mustachians: Do you have earthquake insurance?
« on: January 04, 2018, 09:32:24 AM »
Hello Fellow California Mustachians. Iím wondering if anyone carries earthquake insurance. Seems like weíve been lucky over the past few years, with only minor earthquake action. But you never know whatís lurking.

Earthquake insurance is rather expensive ($200/month). However, damage could be expensive, if we had a big quake. One alternative is to take our chances and assume we could get a reasonable loan to rebuild if necessary. Since we are Mustachian, we have some reserves for minor repairs.

Would to to get thoughts from others on whether they think earthquake insurance is worth the cost.

BayAreaFrugal

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #1 on: January 04, 2018, 10:01:38 AM »
I take my chances. In addition to the premiums being crazy expensive, the deductible is also massive, typically 15% of your insured value, which given California property values is an insane amount of money. I figure the chances of an earthquake causing $100k+ of damage to my house is pretty low, and if it does happen, we're all equally screwed. :)

trollwithamustache

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #2 on: January 04, 2018, 10:07:36 AM »
I take my chances. In addition to the premiums being crazy expensive, the deductible is also massive, typically 15% of your insured value, which given California property values is an insane amount of money. I figure the chances of an earthquake causing $100k+ of damage to my house is pretty low, and if it does happen, we're all equally screwed. :)

all of this plus one.

ixtap

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #3 on: January 04, 2018, 10:10:12 AM »
No, but I live on a boat, currently in an area not susceptible to tsunamis.

DTaggart

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #4 on: January 04, 2018, 10:30:55 AM »
I have it, but my premiums are only like $100-$150 per year. I don't think I'd do it for $200/month.

MaybeBabyMustache

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #5 on: January 04, 2018, 10:58:18 AM »
I take my chances. In addition to the premiums being crazy expensive, the deductible is also massive, typically 15% of your insured value, which given California property values is an insane amount of money. I figure the chances of an earthquake causing $100k+ of damage to my house is pretty low, and if it does happen, we're all equally screwed. :)

This. It's crazy expensive where we live

oldladystache

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #6 on: January 04, 2018, 11:52:39 AM »
I take my chances. In addition to the premiums being crazy expensive, the deductible is also massive, typically 15% of your insured value, which given California property values is an insane amount of money. I figure the chances of an earthquake causing $100k+ of damage to my house is pretty low, and if it does happen, we're all equally screwed. :)

This. It's crazy expensive where we live

me too. never had it.

sisto

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #7 on: January 04, 2018, 12:27:25 PM »
I've lived here basically all my life and never had it or needed it knock on wood.

ysette9

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #8 on: January 04, 2018, 12:33:40 PM »
We did end up getting it recently with the house we just purchased. I donít remember what the additional premium was but it was much less expensive than I would have guessed. I looked at the coverage, deductible, and payback period and decided it made sense. Major damage from an earthquake would be a bummer and impact my finances, so I am insuring against it.

zinnie

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #9 on: January 04, 2018, 12:37:59 PM »
It kind of depends on where you live too, no? Iíve studied the fault lines near us and feel pretty comfortable not having it. The premium seemed too high compared to the likelihood an earthquake would do major damage.

There are some structural/ foundational things we plan to do to better protect our old house, but havenít exactly gotten around to it, yet...

FINate

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #10 on: January 04, 2018, 01:03:40 PM »
It kind of depends on where you live too, no? Iíve studied the fault lines near us and feel pretty comfortable not having it. The premium seemed too high compared to the likelihood an earthquake would do major damage.

There are some structural/ foundational things we plan to do to better protect our old house, but havenít exactly gotten around to it, yet...

Not just where you live, but the type and age of construction. Setting prices the same across the state would be grossly unfair, would never work. Detailed USGS surveys document soil types (https://earthquake.usgs.gov/hazards/urban/sfbay/soiltype/), topology, and proximity to known fault zones. We also have a pretty good idea of the statistical likelihood of a major earthquake for each fault zone, and approximately how different types of structures hold up. Premiums are based on these factors plus desired deductible, and other features of the policy. The CA Earthquake Authority has an online calculator you can play with: https://www.earthquakeauthority.com/california-earthquake-insurance-policies/earthquake-insurance-premium-calculator

Our premium is fairly reasonable (like $60/month last I checked) even though we are close to a major fault, however, we have new-ish construction on slab foundation, on flat land rather than a hill, and our geology (sandstone) is pretty good in an earthquake.

If you have an old house with post and pier foundation on artificial fill...yeah, you're going to pay a lot more. But you're also way more likely to suffer catastrophic losses.

zinnie

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #11 on: January 04, 2018, 04:46:14 PM »
Useful links, thanks! Haven't thought much about this since we bought our house (though those disclosures CA gives you with pictures of destroyed houses are TERRIFYING). We did have a geological engineer out at one point and he did an analysis of the foundation and soil type. I remember him giving it a positive review but I'll have to dig that back up. We are on a steep hill...

I've always assumed we'd just have fun building a new house if we had some sort of catastrophic event that homeowner's insurance didn't cover. At this point our lot is valued at basically what we paid for our house. My husband is an architect who has always wanted to design his own house, and if we started from scratch we could address some big issues we have with our current house's footprint. But maybe that is just rationalization!

Sending everyone in this thread w/o insurance good vibes for no earthquakes :)

cchrissyy

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #12 on: January 04, 2018, 06:27:00 PM »
I don't

partly because of the high annual cost and the low coverage benefits like others mentioned

but the main reason I don't is that my homeowners policy does cover many earthquake-related effects that I am concerned about. For example, while they don't cover direct shaking damage they DO cover losses from fires caused by an earthquake.

aneel

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #13 on: January 04, 2018, 06:31:26 PM »
It really depends on where you live. The understanding of risk in the SF area has changed in recent years and resulting in an increased expected level of risk. If you can't self insure, having a plan, or EQ insurance isn't a bad idea in EQ prone areas.

Dicey

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #14 on: January 04, 2018, 07:46:37 PM »
Nope. Premiums are high, deductibles are huge. The value just isn't there. Our house is newer, foundation is bolted down, WH is strapped, etc. We are self insured and we don't worry much about it, not even after last night's 4.4 jiggler.

Rylito

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #15 on: January 05, 2018, 12:15:18 AM »
I live on a boat now, so no, but when I did have a house in Oakland you bet I had the insurance.  This was due to proximity to the Hayward Fault and the fact that the house was not particularly well built. 

One thing to consider is that if there is an earthquake strong enough to damage your home lots of other homes will likely be damaged as well, driving up rebuilding costs.  (See what's happening in Santa Rosa currently.)  At the time I felt I could have covered the deductible OK, but not much more than that, and I didn't think it would have taken a whole lot of damage for repair costs to exceed the deductible.  So I felt there was value in having the insurance. 

SnackDog

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #16 on: January 05, 2018, 02:39:19 AM »
If your house has any potential improvements or retrofits which would improve it's resistance to earthquakes, your money would be best spent on that first.  Simple improvements like bolting the foundation and shoring up cripple walls could cost a few thousand but save tens or hundreds of thousands in potential damage.

Be aware that structures have been damaged during modest recent California earthquakes (1989, 1994), particularly when located on unstable soil. And The Big One has not struck since 1906 and may or may not hit any day.  The USGS does try to predict events and consequences, but if Harvey is any indication one shouldn't place too much confidence in government agencies.

https://media.gettyimages.com/photos/general-view-of-the-marina-district-disaster-zone-after-an-earthquake-picture-id1583045

zinnie

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #17 on: January 05, 2018, 05:03:20 PM »
My house needs to be bolted to the foundation. Maybe that's what I'll focus on next in home improvements...

Cali Nonya

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #18 on: January 05, 2018, 06:02:43 PM »
Previous CA home owner, and yes I did carry earthquake insurance.
But I am also a geologist so I think that is a risk I do understand rather well and one of the few I think was worth insuring against since it is something that you have no control over.

I know in my case the CA backed earthquake insurance was only $200 per year for a ~$400,000 home (newer construction).  But in a rather high-risk area.
In general a small enough price for the value.

Retire-Canada

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #19 on: January 05, 2018, 10:35:55 PM »
Would to to get thoughts from others on whether they think earthquake insurance is worth the cost.

I got rid of my earthquake insurance and dropped a huge chunk off my policy. The deductible is not your normal deductible it's a percentage of your total policy value. So if you have a 10% deductible for earthquake damage and a $1M overall policy your deductible is $100K. So for any small quake you won't have enough damage [direct damage due to shaking] to get a claim paid. And if the big one comes I doubt there will be enough solvency in the insurance companies to pay out the claims because the damages will be immense.

Edit: Sorry saw CA in title and thought that was Canada. I'm on Vancouver Island so we are in the PNW megathrust quake zone.

Tuskalusa

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #20 on: January 06, 2018, 12:19:30 AM »
Thanks for the thoughtful insights. Really appreciate. I didnít realize the deductible was a percentage of policy value. Definitely makes the ROI very low.

NoraLenderbee

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Re: CA Mustachians: Do you have earthquake insurance?
« Reply #21 on: January 08, 2018, 12:36:28 PM »
I take my chances. In addition to the premiums being crazy expensive, the deductible is also massive, typically 15% of your insured value, which given California property values is an insane amount of money. I figure the chances of an earthquake causing $100k+ of damage to my house is pretty low, and if it does happen, we're all equally screwed. :)

Same here, for the same reasons. My house is 88 years old. We had it bolted to the foundation when we bought it. If quake damage manages to exceed the deductible, there will be much bigger problems.