Is Earthquake insurance worth it (Torrance, Fortuna: car insurance, mortgage, house)

[california_sam]

Hey Guys,

I'm planning to buy house in Torrance.Do you think it's worth to buy Earthquake insurance with so much high premium than the normal fire insurance ?

Sam.

[antarez]

No it isn't, unless you outright own it or have an enormous amount of equity in the property.

I grew up in that area and we never had any earthquake that did any real damage.

Yes there is always talk about " the big one" but that's allways been going around.

If and when it happens FEMA will step in and I would bet that there would be people that came out of it better uninsured than those with insurance with that giant deductable.

Keep in mind that IF a big quake ever did happen it would take several years of hassle to see any return on that insurance, just look at the numerous cases around California of people with fire insurance that had to wait YEARS to get their homes rebuilt and the stress and hassles of having to sue their insurance companies to force them to honor their policies.

[CaliInChappaqua]

You might have difficulty getting a mortgage without earthquake insurance.

[SandyCo]

If there's an earthquake that does considerable damage to your house, then yes, earthquake insurance is worth it. Otherwise...?

Car insurance is the same way, of course. In fact, any insurance is the same way. Fire insurance, flood insurance, etc.

Have you ever actually read your car insurance policy? It's amazing what isn't covered - including acts of God (earthquakes?).

[RVD90277]

Personally, I don't think it's worth it.

I think if there is such a big earthquake that your house has major structural damage, it basically means that every house in your area will suffer from major damage...which means that the insurance company won't have enough money to pay all of the claims anyway.

The only situation where it will work out is if your house is damaged but everyone else's house is fine. So evaluate the chances the that. Is your house old, etc.? If not, I would pass on it.

[california_sam]

Thanks everyone for your reply. I'm also thinking of declining it right now. Yes my House is old built in 50's (like most Torrance SFR) and on a slab foundation (Not sure if that makes a diff). Fortunately it's not in the expansive soil area (In that case i would have take the insurance).

[lesallimc]

I come from an area plagued by tornadoes. I don't know what it takes to get help from FEMA (a friend of mine who is a single mother of two with lower middle income didn't qualify), but anybody expecting the government to swoop in and take care of everything is misinformed. Not giving you advice one way or the other, but something to think about. I don't care to own property here because of the earthquake issues, but I do have earthquake insurance as a renter.

[parker]

Our insurance agent told us that you had better hope that there is a fire due to the earthquake as the homeowner's insurance is FAR better than the EQ insurance. If there is a fire...HO Insur covers the home, not EQ...even though the initial issue was an EQ!

[Mathguy]

Originally Posted by antarez

No it isn't, unless you outright own it or have an enormous amount of equity in the property.

I grew up in that area and we never had any earthquake that did any real damage.

Yes there is always talk about " the big one" but that's allways been going around.

If and when it happens FEMA will step in and I would bet that there would be people that came out of it better uninsured than those with insurance with that giant deductable.

Keep in mind that IF a big quake ever did happen it would take several years of hassle to see any return on that insurance, just look at the numerous cases around California of people with fire insurance that had to wait YEARS to get their homes rebuilt and the stress and hassles of having to sue their insurance companies to force them to honor their policies.

1. FEMA isn't going to bail out people that willingly chose not to buy earthquake insurance.

2. Any major insurer is going to pay off the policy quickly and efficiently or face huge fines and penalties. The fact that rebuilding takes a lot of time is moot.

3. It's extremely rare to hear of people having to sue their insurers for coverage so I don't think you are offering a reasonable picture of the situation. I recall seeing some statistics on statefarm after hurricane Katrina and they'd paid out some 95+% withint the first month or so.

[BayAreaHillbilly]

Assuming you have not used your house as an ATM, it has appreciated, and you plan some day to cash out, probably.

Repairing a severely damaged foundation starts at about 100K. Any questions?