CEA Earthquake Insurance for downtown condo (San Diego, San Francisco: 2013, homeowners association, condos)

[snpdragr]

Currently I'm in the middle of escrow on a condo purchase in east village. I'm wondering what are peoples thoughts on CEA earthquake insurance. I did search the forum for older threads but I understand CEA has recently reduced premiums and there are more options now.

The CEA premium calculator is available here:

Premium Calculator - CA Earthquake Authority

Putting in some rough numbers, insurance would be $270 with a $50k limit on building property and loss assessment (5% deductible). Increasing the coverage to $100k results in a premium of $517. $100k is the max coverage allowed for condos.

The building does not have a master earthquake policy. It's newer construction (post 2000), concrete, mid-rise.

So if you do have a condo downtown, did you purchase CEA insurance? why or why not? if yes, what limits did you pick?

Thanks for any feedback

[snpdragr]

Hmmm no responses.

I did find out that the building master policy covers items like fire caused by an earthquake, just not the structural damage itself. So that is good and cuts the risk significantly I think.

We are leaning towards getting CEA insurance as we have significant equity (i.e. walking away from a mortgage is not an option).

I know some people suggest not getting earthquake insurance as the risk is low for san diego. However, I think this accounted for in the premiums. For example, pricing the same policy in the bay area results in a premium that is over 5x more expensive.

[oddstray]

I'm not downtown, but I agree. An assessment for earthquake damage repair would be very difficult for us to cope with if we had no insurance.

Your added risk downtown is proximity to the Rose Canyon fault (which was discovered to be active, not dead as was thought several years ago). Also, since your HOA doesn't have a master earthquake policy you'll also be assessed a share of the repairs of the common parts of your building.

Our added risk is that our buildings are on part fill and part bedrock, and the dissimilar surfaces are much more likely to result in damage to the buildings.

[LagunaMom]

We live in AZ but own properties (including a condo) in SoCal. Even though they're not particularly close to fault lines, we always pick up earthquake insurance. While the chance of damage is small, we need to protect our investments. Insurance isn't expensive.

[bigdaddy5]

My home is located in the firezone of SD County. It's tough to get insured in my area. AAA dropped us after the big SD fires of 2007.

Farmers Insurance stepped up and we're covered with home/car. No worries.

Hit them up.

[jnojr]

Originally Posted by bigdaddy5

My home is located in the firezone of SD County. It's tough to get insured in my area. AAA dropped us after the big SD fires of 2007.

Farmers Insurance stepped up and we're covered with home/car. No worries.

Hit them up.

Umm, CEA is the ONLY provider of earthquake insurance in California. Nobody else is going to write you a policy.

[jnojr]

Originally Posted by snpdragr

So if you do have a condo downtown, did you purchase CEA insurance? why or why not? if yes, what limits did you pick?

My SD condo is in Fashion Valley. I got CEA... I don't recall having any choices, it was "take it or leave it", and the yearly premium wasn't much (there's a master policy on the building). A big earthquake isn't an "if", it's a "when". CEA is far from perfect... high deductible and a relatively low cap on payouts, but for me the premium is worth the $80-90K I could get out of them.

My mom skipped it on her house. Premiums were MUCH higher.

[Carrie2979]

My husband and I just bought in Little italy and you got me thinking, however coming across some articles, you may want to look more into it before purchasing earthquake ins.

La times July 2013:

Does homeowners association have to carry earthquake insurance? - latimes

"The board's decision not to carry earthquake insurance may have an additional effect on each titleholder. Many insurance companies will not insure individual property, units or homes located in common interest developments unless that association is covered by adequate insurance, including earthquake coverage. If a catastrophic event occurs, these owners will be looking to past and present board directors who made these decisions, and the association, for indemnification and reimbursement for damages."

San Francisco 2010 article:
Condo owners and quake insurance - SFGate

"If unit owners buy coverage for themselves, but the HOA has not purchased it for the building and it is destroyed, the owners might have nothing to come home to

8/2011 Santa clarita:
http://www.signalscv.com/m/archives/50333/

Of course, these cities are not san diego...I would imagine that it differs from city to city, county to county, therefore it is without a doubt something to look into.

[snpdragr]

Originally Posted by Carrie2979

My husband and I just bought in Little italy and you got me thinking, however coming across some articles, you may want to look more into it before purchasing earthquake ins.

You raise some good points. Regarding insurability, I checked with several different companies and they all had no problem issuing condo insurance even though the master policy doesn't cover earthquakes. The main thing they were checking was for prior water damage claims. The CEA also does not require a master earthquake policy on the building.

One thing I wish sellers would do is state whether their HOA has earthquake insurance in their listing. But I haven't seen a single condo in our search that stated the HOA did in fact have earthquake coverage. Maybe this is because almost no buildings carry earthquake insurance? or maybe it's only the buildings with $1000/month HOAs (out of our budget)

"If unit owners buy coverage for themselves, but the HOA has not purchased it for the building and it is destroyed, the owners might have nothing to come home to

In this case, I believe the CEA will payout for the permanent loss of value through the "loss assessment" coverage. Of course though this is limited to 100k which is far below the market value of any condo.

My hope is that in the case of a severe earthquake on the rose canyon fault, the damage might be limited to a few tens of thousands per unit owner. Small enough so that owners could still pay for repairs and not walk away.

Of course, these cities are not san diego...I would imagine that it differs from city to city, county to county, therefore it is without a doubt something to look into.

The big issue for me, is that I don't have any good way of measuring earthquake risk for san diego and our building in particular. Our building is not right above a fault line like Atria/101 Market but the whole of downtown is labeled as "liquefaction zone". I also don't have a good idea about the construction, ease of repairability, etc. other than it's a newer building and so should meet the latest building codes.

I suppose if I were setting up the CEA, I'd make premiums linearly proportional to the risk (i.e. San Diego is less than 5x bay area) but I can also see them charging more in lower risk areas to subsidize higher risk place.