Since forecast of the “big one” is due for CA, I’ve read some pros & cons of having the earthquake insurance for CA home owners.
One of the most striking argument against the insurance is that CEA will likely to run out of funds and 15% or higher deductible makes the insurance not worth the premium.
Hoping to get some sound reasons to help make the decisions. Thanks.
Check out the thread below for starters.
Plagues earthquake locusts. Good luck with insurance. When all hell breaks loose Smith and Wesson maybe your best insurance. I am betting on Strum Ruger.
15% deductible and will the insurer have enough funds in the kitty to cover all the claims. The problem with earthquake is that many homes will be damaged all at the same time and everyone will be making a claim at the same time.
Moments Later: Will fed print money to help homeowners affected by a shake should it happen?
CEA now offer 5%,10%.15%,20%,25% deductible options and adjust premiums accordingly. Their website claims that they have sufficient funds to cover loses from 1989 + 1994 earthquake were they to happen today at the same time. The government “may” bail you out - but it will take years to receive the funds and it will likely be a low interest loan. In the mean time you will have a mortgage to pay and no place to stay.
I signed up for the earthquake retrofit program - CEA gives $3k bolt house to foundation. I also have earthquake insurance.
Felt it pretty clearly.
Me too in Walnut Creek
I wouldn’t be concerned about the Earthquake Authority’s ability to pay claims. Yes, it would be a lot of claims at once but few people take out the policy and some go with Geovera or other private insurers instead of the earthquake authority.
I’ve always found the reaction to the 15% part strange. If you have trouble affording a 15 deductible how would ever to be able to afford a 100% loss?
Earthquake insurance costs about $1/sf annually. Pretty expensive for limited coverage. Look at the exclusions and limits. A quake 8 and over will deplete the system. Quakes under 6 cause limited damage, under the deductible. So it is only good for a Goldilocks quake 6-8 Richter scale quakes are extremely rare.
I felt the earthquake. It sucked! It really sucked! But no damage. Just lots of swaying, and I thought I was high. Which was accurate enough. I was really focused on how high I was (12th floor). Which made me doubt an earthquake had actually happened. Son of a gun! I don’t think the earthquake was real. I’m glad I didn’t waste my money on insurance.
When deciding on earthquake insurance, consider your financial situation and property’s risk exposure. If you live in a high-risk area, insurance provides valuable protection and peace of mind. You can customize coverage to balance affordability and comprehensive protection by consulting with insurance professionals.