Author Topic: Earthquake insurance... drop it?  (Read 1796 times)

thedigitalone

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Earthquake insurance... drop it?
« on: May 23, 2017, 12:24:23 PM »
Living in the PNW we’ve always had earthquake insurance on our house, our annual premium is $1,673.52 and $683.96 of that is for the earthquake coverage.  Our insurance USAA no longer offers earthquake coverage but we’re grandfathered in, if we drop it we can’t add it back.

I’m strongly considering dropping coverage.  Our house is wood frame, not masonry, is not on any of the known fault lines and is an area that was scraped clean by the ice-age glaciers, so zero liquefaction risk.

The $57 per month is not a burden, but it could go to taxable investments… what would you do?

trollwithamustache

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Re: Earthquake insurance... drop it?
« Reply #1 on: May 23, 2017, 02:06:12 PM »
If you drop the insurance, you will be self insuring.  OK fine.

Now that the risk is on you, have you done anything to mitigate it? has the house had some basic earthquake retrofits?

Greystache

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Re: Earthquake insurance... drop it?
« Reply #2 on: May 23, 2017, 03:19:15 PM »
I live in SoCal and I have never carried Earthquake insurance. For me the biggest problem is the high (20%) deductable. I would have to sustain over $100K worth of damage before the policy would even begin to pay off. I have a wood frame house bolted to the foundation so it should do relatively well in all but the most severe earthquakes.  I also wonder if the insurance companies could survive a major quake in a densely populated area like SoCal. Would they really have the ability to pay that many claims?

nickybecky1

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Re: Earthquake insurance... drop it?
« Reply #3 on: May 23, 2017, 03:26:55 PM »
I live in the PNW, we don't have earthquake insurance, and we did retrofit our home and take some other precautions. BUT in your case, I'm not sure I'd drop it, because 1) it's cheap 2) it's not a standalone earthquake policy and 3) you can never go back

Our concerns were the high cost of premiums for us, and concern that a large earthquake would wipe out the insurance company as well. The other big thing, and this one I can't tell from your original post, is the deductible. Some insurance companies have a $50,000 to $100,000 deductible so we decided that it's a lot to pay to then be paying such a huge amount anyway.

Our neighbors have earthquake insurance that costs more than yours and feel it's money well spent for the peace of mind.

gooki

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Re: Earthquake insurance... drop it?
« Reply #4 on: May 25, 2017, 02:54:25 AM »
I'd drop it. It seems like you've done your research on risk.

Dicey

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Re: Earthquake insurance... drop it?
« Reply #5 on: May 25, 2017, 08:19:49 AM »
Not so fast. What's your house worth? How much is your mortgage? How big is your stache?

In the event of a loss that renders your house uninhabitable, you will have to pay rent on temporary digs, continue to make the mortgage payments, and pay for the repairs at a time when contractors are in high demand, which won't be cheap.

It seems you have a unicorn policy. It could be penny wise and pound foolish to set it free.

Full disclosure: I don't have EQ insurance, because was never affordable in my accumulation days. Now that I'm FIRE,  we don't really need it. It's still damned expensive and the deductibles are steep  That being said, it would still hurt like hell if our home were destroyed in the not-so-unlikely event of an earthquake.