Earthquake insurance, Yes or No?

[Alex_angel]

My wife has been doing some research on Home insurance. I am amazed at the cost of adding earthquake insurance. It litteraly doubles the monthly payment and they require a 10% deductible for it.

I have asked 5 people at work that own and none of them have earthquake insurance.

I’d appreciate any opinions on whether it is a suckers deal or not.

TIA

[XBoxBoy]

When I bought in ’98 my realtor flat out told me, “don’t buy it, if we have an earthquake and your house is damaged the government will come in and pay for reconstruction. Buying earthquake insurance is just throwing money down the drain.”

Given all the other bailouts I’ve seen in recent years, I gotta say this encouragement to be irresponsible makes a lot of sense.

[XBoxBoy]

When I bought in ’98 my realtor flat out told me, “don’t buy it, if we have an earthquake and your house is damaged the government will come in and pay for reconstruction. Buying earthquake insurance is just throwing money down the drain.”

Given all the other bailouts I’ve seen in recent years, I gotta say this encouragement to be irresponsible makes a lot of sense.

[desmond]

If you have substantial equity, get it, if not, let the house cave in and walk.

[desmond]

If you have substantial equity, get it, if not, let the house cave in and walk.

[NotCranky]

Make sure the Feng Shui is in working order and everything will be fine.

Did you buy a house Alex?

[NotCranky]

Make sure the Feng Shui is in working order and everything will be fine.

Did you buy a house Alex?

[(former)FormerSanDiegan]

First, I wouldn’t rely on a realtor’s advice from 1998 to make insurance decisions.

Second, I tend to agree along the same lines as desmond. Depending on your other assets it may make sense to buy earthquake insurance under the following conditions:
1. You have substantial equity in your house.
2. The cost to replace the structure is significant with respect to the value of the property (land) and/or with respect to your non-RE net worth.

[(former)FormerSanDiegan]

First, I wouldn’t rely on a realtor’s advice from 1998 to make insurance decisions.

Second, I tend to agree along the same lines as desmond. Depending on your other assets it may make sense to buy earthquake insurance under the following conditions:
1. You have substantial equity in your house.
2. The cost to replace the structure is significant with respect to the value of the property (land) and/or with respect to your non-RE net worth.

[NotCranky]

I would also consider how was the house built and what kind of features does it have,although I am not sure this matters if your house takes a direct hit. I am sure it does for home not at the epicenter of a large fracture.

Just an aside: We often talk about what housing would look like if there were no mortgages. Sometimes I wonder what people would be willing to buy if there were no insurance,especially cash buyers.

[NotCranky]

I would also consider how was the house built and what kind of features does it have,although I am not sure this matters if your house takes a direct hit. I am sure it does for home not at the epicenter of a large fracture.

Just an aside: We often talk about what housing would look like if there were no mortgages. Sometimes I wonder what people would be willing to buy if there were no insurance,especially cash buyers.

[zk]

I’d say it depends where you live. Most parts of San Diego have much less potential for a quake of the size that would damage a wood-frame house than most parts of LA. There are maps on the internet that show what the odds are of any shaking intensity (the actual strength of the shaking in a particular location, measured on the Mercalli scale, as opposed to the overall strength of a quake, which is based on the Richter scale and doesn’t really tell you as precisely how much shaking will be involved) in any location in Socal. I’d check those maps, see how seismically active your area is, and base your decision at least partly on that.

[zk]

I’d say it depends where you live. Most parts of San Diego have much less potential for a quake of the size that would damage a wood-frame house than most parts of LA. There are maps on the internet that show what the odds are of any shaking intensity (the actual strength of the shaking in a particular location, measured on the Mercalli scale, as opposed to the overall strength of a quake, which is based on the Richter scale and doesn’t really tell you as precisely how much shaking will be involved) in any location in Socal. I’d check those maps, see how seismically active your area is, and base your decision at least partly on that.

[Tuba]

I would say No if it is a newer home.

Here is a great article about earthquakes related to our modern building standards with slab foundations and wood frame construction. Starts at pg.4

http://www.apawood.org/pdfs/managed/R240.pdf

[Tuba]

I would say No if it is a newer home.

Here is a great article about earthquakes related to our modern building standards with slab foundations and wood frame construction. Starts at pg.4

http://www.apawood.org/pdfs/managed/R240.pdf

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