earthquake insurance

[carlsbadworker]

[quote=AN]
Now I get where you’re going with this. Lets assume that you buy the insurance and w/in a year, there’s an earthquake that total your house. You have an option of paying $46k to rebuild your $300k house, or spend $60k to buy another house. I still think $46k < $60k. However, if you down less than 20%, then it would be better to just walk away. Then in that scenario, you're right, there's no point in buying insurance. Every year that you pay into your mortgage your principle goes down, which give you more incentive to get insurance, right? Lets say you won't experience an earthquake that total your house for 10 years, you would have paid $10k in premium + $45k to rebuild (assuming cost to rebuild doesn't go up in 10 years). So, if you rebuild, you're still only out $55k. However, if you walk away, you're out $108k you've put into your house ($60k in down payment and $48k in principle) + $60k (20% down on an equivalent house, assuming housing doesn't go up in 10 years). Besides the scenario where your down payment of a new house is less than to cost of rebuilding your current house + the yearly premium, can you give me a scenario where it would make more sense to not get earthquake insurance? In the scenario you gave in your last post, $60k is still greater than $45k. Also, if I'm not mistaken, you don't have to rebuild to the exact quality. So, lets say you're covered for $300k and your house get totaled. They pay you $255k to rebuild your house. You can rebuild your house up to $255k and not have to spend a single penny out of pocket. Right?[/quote] 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.

[an]

[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.

[an]

[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.

[an]

[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.

[an]

[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.

[an]

[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.

[temeculaguy]

carlsbadworker, I got a quote from my insurer for about $450 a year. Of course, I used your thinking and declined it, I won’t get earthquake insurance until I hit about 50% equity, witht he deductables the way they are, it’s cheaper to just go buy another house. Plus if it hits hard enough to level my place, why rebuild, you will be the only house on your street with piles of rubble on all sides

[temeculaguy]

carlsbadworker, I got a quote from my insurer for about $450 a year. Of course, I used your thinking and declined it, I won’t get earthquake insurance until I hit about 50% equity, witht he deductables the way they are, it’s cheaper to just go buy another house. Plus if it hits hard enough to level my place, why rebuild, you will be the only house on your street with piles of rubble on all sides

[temeculaguy]

carlsbadworker, I got a quote from my insurer for about $450 a year. Of course, I used your thinking and declined it, I won’t get earthquake insurance until I hit about 50% equity, witht he deductables the way they are, it’s cheaper to just go buy another house. Plus if it hits hard enough to level my place, why rebuild, you will be the only house on your street with piles of rubble on all sides

[temeculaguy]

carlsbadworker, I got a quote from my insurer for about $450 a year. Of course, I used your thinking and declined it, I won’t get earthquake insurance until I hit about 50% equity, witht he deductables the way they are, it’s cheaper to just go buy another house. Plus if it hits hard enough to level my place, why rebuild, you will be the only house on your street with piles of rubble on all sides

[temeculaguy]

carlsbadworker, I got a quote from my insurer for about $450 a year. Of course, I used your thinking and declined it, I won’t get earthquake insurance until I hit about 50% equity, witht he deductables the way they are, it’s cheaper to just go buy another house. Plus if it hits hard enough to level my place, why rebuild, you will be the only house on your street with piles of rubble on all sides

[sdcellar]

If, during this catastrophic earthquake, your gas line should break and subsequently ignite and burn the house to the ground, it will be covered by your standard homeowners policy.

At least, this is how it’s been explained to me by some folks who will probably take up smoking again when the big one hits. (it’s stressful, you know…)

[sdcellar]

If, during this catastrophic earthquake, your gas line should break and subsequently ignite and burn the house to the ground, it will be covered by your standard homeowners policy.

At least, this is how it’s been explained to me by some folks who will probably take up smoking again when the big one hits. (it’s stressful, you know…)

[sdcellar]

If, during this catastrophic earthquake, your gas line should break and subsequently ignite and burn the house to the ground, it will be covered by your standard homeowners policy.

At least, this is how it’s been explained to me by some folks who will probably take up smoking again when the big one hits. (it’s stressful, you know…)

[sdcellar]

If, during this catastrophic earthquake, your gas line should break and subsequently ignite and burn the house to the ground, it will be covered by your standard homeowners policy.

At least, this is how it’s been explained to me by some folks who will probably take up smoking again when the big one hits. (it’s stressful, you know…)

[Author]

Posts