[quote=AN]Lets take your numbers then, $1k/yr for the next 50 years = $50k + $45k (15% deductible of a $300k house). That’s $95k out of pocket to to rebuild a $200k-300k house. That still seem worth it to me. Even if nothing happen until 100 years from now, you’re talking about $145k total payment to rebuild a $200k-300k house (assuming cost to rebuild won’t go up for the next 100 years). Still seem worth it to me. Am I missing something?[/quote]

You are missing my point on “insuring for the lender.” Say if we just bought a $300K house with $60K down payment, if the house is totalled by an earthquake. I am either paying $45K out of the pocket and spend my time to repair the house or paying $60K to buy another $300K house with 20% down again, then stop paying on the original collapsed house. Wasn’t that become the lender’s problem? So basically, I pay $1K year for a possibility saving of $15K (assuming total collapse). I don’t think the risk is that high.
And if the damage is less than $45K (which is more likely, given that it is built after 2000), you just wasted $1K insurance premium.