It seems California is in a high-risk earthquake zone and overdue for a large earthquake. I just got a quote from my home insurance company about adding earthquake insurance and here's the quote:
Coverage: dwelling: 437,000, personal property: 5000, Loss of use: 1500, Building codes upgrade: 10000
Deductible: 65500
Premium: 1268
My house is a 1700 sqft ranch-style house built in 1955. Currently the market price is about 1.5M (about 1.1M land and 400k dwelling) and we have near 900k mortgage left on the house. I think I will be able to survive in the case we do not have insurance and the house is completely down in an earthquake, as our current portfolio size is about half million which will be enough to rebuild the house. However, this would significantly delay all of our financial plan for many years.
The insurance premium looks OK to me, but I feel the deductible is really high. I have a feeling that in normal earthquake we will not reach the deductible at all. So, is earthquake insurance worth it?
If an earthquake hits my house, can I completely teardown and rebuild my house new, maybe cost at 600k in total, and will the insurance company pay 437k out of the 600k total, or do I have to restore the house to the current state? It is an old house that I do want completely rebuild it, even without an earthquake, as most value now comes from the land, and I believe the land value will keep increasing.