M. Cole, Home Buyer in 92672

If you own a condo and the homeowner association does not provide earthquake insurance, can your neighbor's lack of insurance hurt you?

Asked by M. Cole, 92672 Sat Mar 26, 2011

Let's say you buy a condo on the fourth floor of a condo development. Let's also assume the homeowner association does not provide earthquake insurance. A quake strikes and damages the building. You purchased earthquake insurance but the owner of the condo directly below you on the third floor did not.

Your condo is now structurally weakened but the repair cannot be made to just one unit. Repairs cannot be made until the unit beneath your unit is stabilized. Though you were prudent enough to purchase earthquake insurance, your condo is not tenable. You cannot even sell your condo without tremendous loss until the repairs have been made.

Can you protect yourself against this scenario? Do you just avoid buying a condo when the homeowner association does not provide earthquake insurance for all units? (The article at the following web page implies that earthquake insurance is optional in condo developments:
http://www.californiacondoguru.com/hoarticles/earthquakemmou… .)

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Answers

11
Outstanding question, I can honestly say I have never given this any thought. Please speak with an insurance agent, or more importantly your insurance agent to see what would or would not be covered.

Thanks for the great question.
Spirit
1 vote Thank Flag Link Sat Mar 26, 2011
become active with your homeowner's association and correct this problem, Nothing in you association is set in stone if you are willing to get off the couch and put your effort into changing what you do not like.
1 vote Thank Flag Link Sat Mar 26, 2011
The answer to your question "Do you avoid buying a condo when the HOA does not provide earthquake insurance for all units" is YES!. The Cal earthquakes showed how poorly insured the condo's were, and the cost of eartquake insurance is now in a stste fund which is underfunded.



David Cooper. Las Vegas Foreclosure Investor in Bank Owned Cash flow Houses. FReee List +1-7024997037...
not a real estate agent. ask about limited partnerships
0 votes Thank Flag Link Sun Mar 27, 2011
Once again knowing where the complex is located and what the seismic zone is (1-4) the higher number being the bigger risk area will give you a lot of information about the risk and probability factor. This is how the actuaries for insurance companies do their math.

There are no set numbers (17k) to refer to as was intimated by a previous comment. The guidelines for establishing costs are predicated strictly on risk. If you're in a zone 4 seismic area you will pay more and have a much higher deductible or pay handsomely for a lower one.

But to address your question specifically if your condo complex does not have earthquake coverage for the entire common walled complex I don't think there's a legitimate insurance company in the business that would cover you structurally. If you think about it how could they? What impacts your neighbors side to side, over and under you will impact you.You could probably look into an interior contents policy but I would think that would be pretty pricey.

Check out the following links: The first one will tell you what seismic zone you're referring to which looks like the Glendale area. the second link will provide you with a list of HOA/Condo EQ Ins. specialiasts. Good luck.

http://gmw.consrv.ca.gov/shmp/MapProcessor.asp?Action=IMap&a…

USGS Quadrangles Available for Download in Current Map:
El Monte Los Angeles Hollywood Beverly Hills Mount Wilson Pasadena Burbank Van Nuys Condor Peak Sunland San Fernando

https://encrypted.google.com/search?hl=en&biw=1192&b…
0 votes Thank Flag Link Sun Mar 27, 2011
Great question and agents have covered a lot...first contact insurance agents...yours and the home owners association.

What are the reserves in the HOA's account ..have you attended any of the Hoa's meetings and brought up your question?
Web Reference: http://www.homesoncells.com
0 votes Thank Flag Link Sun Mar 27, 2011
You really need to find out if you have any community EQ insurance. If not forget it.
0 votes Thank Flag Link Sat Mar 26, 2011
Interesting question! Thanks for making us all think about this one!
The link posted is from 2007.

I would definitely hit an insurance agent up with this scenario. Condo insurance is always such a dilemma. The HOA's cover something's but not others.

My associate recently checked into one policy on a condo community. The HOA's insurance covered everything within the "inside" unit too, as long as it was "original" from the builder.

So if the owner upgraded his flooring from linoleum, or counters to granite.....the difference from the basics installed and the upgrades would not be covered. And as with everything....get it in writing!

Thanks M Cole!
0 votes Thank Flag Link Sat Mar 26, 2011
Individually, you can not insure the structure of your condo.

You can, however, insure the interior of your unit and its contents.

Insurance responsibility for a multi unit condo, as whole, would be in the hands of the association of owners that jointly represent ownership.
0 votes Thank Flag Link Sat Mar 26, 2011
That's exactly what happened in the Northridge, CA earthquake 20 years ago. Pray that the building gets totalled, or else everybody gets HOA dues special assessments to fix all the common areas.

Las Vegas Foreclosure House Investor with Cash Flow. 10% down Financing. Call Free List +1-7024997037
davidcooper@lasvegaswinner.org not a real estate agent
0 votes Thank Flag Link Sat Mar 26, 2011
Usually, I will only answer these questions if I see the person asking is not getting the help they need. There are awesome communities in Irvine where the building are as you are describing, and I am very sure they are to "earthquake" code. The thing about earth quake insurance is you have to have a minimum of around 17K before it kicks in. If the building you are living in has enough damage to have your condo's min kick in we will be having desaster funds kick in. I have lived in California all my life and honestly I feel earth quake insurance is a waste of money! But, ...don't cancel it because of me! Check out your policy and take to your insurance agent!
Sharon
0 votes Thank Flag Link Sat Mar 26, 2011
Have you purchased this condo yet? First of all structural insurance on a conjoined (multi-unit) structure is very difficult if not impossible to find let alone EQ ins. You need to do some homework. Where is this condo located? Is it in a Zone 4 EQ area? When was it built? There's a lot of variables.

But to answer your question I find it highly unlikely that you would be able to find any ligitimate insurance company that would be bold enough to sell you an earthquake insurance policy in a condo complex.
0 votes Thank Flag Link Sat Mar 26, 2011
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