[quote=carlsbadworker]
Right. I think when the equity goes up, it tilts toward buying earthquake insurance. Similarly, if the majority of your wealth is tied to the house, it is probably worthwhile to buy the earthquake insurance as well, regardless of the probability. And if you are certain that the big earthquake will happen, it is worthwhile to buy insurance as well (hence your comparison between 60K and 45K is valid).
The scenario that I can give you is when it has no or small damage. Not all houses collapses in an earthquake. There are many houses that still stand after 1994 Northridge earthquake, that are within miles of the earthquake center. The total property damage from the Northridge is less than $20 billions…compared to trillions of dollar of real estate in California.[/quote]
I agree that if your house is never damaged by an earthquake, then the premium is wasted money. But that’s the nature of all insurance, right? I rather have it and not need than than need it and not have it. Similar to term life insurance, or auto insurance, or any other type of insurance out there.
I don’t think earthquake insurance, or most other type of insurance is meant to be used for minor damages. They’re there for major catastrophes.
BTW, I did a quick estimate for earthquake insurance at CEA website for Temecula and a 300k one story dwelling built after 1991 with 15% deductible has premium of $555/yr. If you’re talking about older homes (1980-1990) 2 stories, then the deductible goes up to $951. I guess a 2 stories house are more prone to damage than a single story and the older your house is, the more prone to earthquake damage it becomes, that’s why premium is higher.
