Kathy Liu Si…, Home Owner in San Francisco, CA

Is it worth buying earthquake insurance for a single family residence?

Asked by Kathy Liu Silverman, San Francisco, CA Sat Oct 19, 2013

Not built on a landfill of course

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Answers

9
Hi Katherine,

I would rather commit funds to earthquake retrofitting an existing structure before even looking at EQ Insurance. In my opinion, EQ insurance is too expensive has too many exclusions and is plagued by its high deductible. Nonetheless, here's where you can check into the coverage: http://www.earthquakeauthority.com/Ceapolicyinformation.aspx…

The reality is that when the next “sizeable" earthquake hits the SF Bay Area and causes widespread damage I would rather have my cash in my hands to start repair/rebuilding ASAP without waiting for the insurance company to hand me a check.

Everyone in the SF Bay Area knows another "big one" is coming. There is an "Expected Housing Losses in an Earthquake" page at http://quake.abag.ca.gov/housing/losses/ which provides some estimates of damage relative to a 1906 & Loma Prieta events.

In my opinion, retrofitting seems like the best use of funds, at least you will have a tangible property improvement and a little more peace of mind once your money is spent.

-Steve
2 votes Thank Flag Link Sun Oct 20, 2013
Depends on the location. In the Marina, for example, it is a must, while in Diamond Heights, it may be a waste of money. For additional information contact us.

Raymond Autry, GRI, ASD, ABI
Broker Associate
The Professional Group
465 California Street
San Francisco, Ca 94104
sanfranciscorealtyteam.com
Raymond@raymondautry.com
1 vote Thank Flag Link Sat Oct 19, 2013
As an added note you may want to consider preparing your home for an earthquake which can save you hundreds of thousands of dollars and even possible displacement from your home entirely. Here's a great link for folks wanting to be proactive and get as prepared as possible.

http://earthquake.usgs.gov/prepare/

If you still think you need to purchase EQ Ins here's a link you may want to check out.

http://insure.earthquakeauthority.com/?gclid=CP7j5aqno7oCFc1…
1 vote Thank Flag Link Sat Oct 19, 2013
We carried EQ ins for years and finally discontinued it because not only was it very expensive there was a very big deductible (100k). We've been in our home for 35 years and been through every major EQ during that time and never lost one glass.

Of course it helps that we're on granite and historically structures on granite fare far better than those on dirt, clay, sandy loam etc. Perhaps you may want to do a little geological research to determine what kind of soil you're on.

You're in a Zone 4 seismic area which is considered very high probability for a major EQ events. You may want to read the following information. If you want to learn more heres the link to the entire site.

http://pubs.usgs.gov/gip/earthq3/safaultgip.html

Also take a few moments to read the blog I posted just yesterday regarding the "GREAT SHAKEOUT DAY" http://activerain.com/blogsview/4223328/today-is-the-day-of-…

When Could the Next Large Earthquake Occur Along the San Andreas Fault?

Along the Earth's plate boundaries, such as the San Andreas fault, segments exist where no large earthquakes have occurred for long intervals of time. Scientists term these segments "seismic gaps" and, in general, have been successful in forecasting the time when some of the seismic gaps will produce large earthquakes. Geologic studies show that over the past 1,400 to 1,500 years large earthquakes have occurred at about 150-year intervals on the southern San Andreas fault. As the last large earthquake on the southern San Andreas occurred in 1857, that section of the fault is considered a likely location for an earthquake within the next few decades. The San Francisco Bay area has a slightly lower potential for a great earthquake, as less than 100 years have passed since the great 1906 earthquake; however, moderate-sized, potentially damaging earthquakes could occur in this area at any time.

A great earthquake very possibly will not occur unannounced. Such an earthquake may be preceded by an increase in seismicity for several years, possibly including several foreshocks of about magnitude 5 along the fault. Before the next large earthquake, seismologists also expect to record changes in the Earth's surface, such as a shortening of survey lines across the fault, changes in elevation, and effects on strainmeters in wells. A key area for research on methods of earthquake prediction is the section of the San Andreas fault near Parkfield in central California, where a moderate-size earthquake has occurred on the average of every 20-22 years for about the last 100 years. Since the last sizeable earthquake occurred in 1966, Parkfield has a high probability for a magnitude 5-6 earthquake before the end of this century and possibly one may occur within a few years of 1988. The U.S. Geological Survey has placed an array of instruments in the Parkfield area and is carefully studying the data being collected, attempting to learn what changes might precede an earthquake of about that size.
1 vote Thank Flag Link Sat Oct 19, 2013
That depends on the policy cost and coverage details however, it's also a personal decision. For some homeowners it just provides extra peace of mind. I personally would invest in seismic upgrades instead because that will not only provide more peace of mind but will also add to my property value and desirability.

Oggi Kashi - 415.690.3792 direct
Broker Associate, Paragon Real Estate Group CA BRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
Web Reference: http://www.oggikashi.com
1 vote Thank Flag Link Sat Oct 19, 2013
Hi Katherine! I really depends on how much equity you have as the deductible for most policies is around 20 - 25% of the value of the home. I usually tell all cash buyers are 50% or more down buyers or those with alot of equity to consider it. It usually doubles your premium from around $1,000 or so per year to about $2,000 per year.
1 vote Thank Flag Link Sat Oct 19, 2013
Hi Katherine--Your question is one of the most commonly asked in San Francisco real estate circles. As a result, I wrote a blog post that I run on a regular basis, just to keep buyers & sellers on the most current thinking about earthquake insurance:

Should You Buy Earthquake Insurance?
http://www.insidesfre.com/should-you-buy-earthquake-insurance/

Cheers,
Eileen
Web Reference: http://www.insidesfre.com
0 votes Thank Flag Link Wed Oct 23, 2013
If there isn't an earthquake then you will save the premiums you paid. If there is an earthquake, the premium will seem very cheap in comparison to the damage. Earthquake Insurance is for the unexpected so its always a good idea if you can't afford the catastrophic damage caused by an earthquake, expecially in an area prone to earthquakes. It's not a question of whether an earthquake will happen, it's a question of when and how severe.
0 votes Thank Flag Link Mon Oct 21, 2013
You have to look at a number of factors when making this decision:

1. What are the soils like underneath your home? There is a LOT of variance in that in the city.

2. How much seismic strengthening has been done?

3. What kind of foundation do you have?

4. When was the property built?

The other factor is how expensive it is. Earthquake policies have a huge deductible on them and the premiums are quite high. Most of our clients prefer to spend money on strengthening the property vs throwing money at insurance, but ultimately you have to make the decision that's right for you.
0 votes Thank Flag Link Sat Oct 19, 2013
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