Earthquake insurance?

The Raleigh Real Estate Team – We Serve Clients not just Locations –
I’m curious how many people have earthquake insurance and what do they pay for it?
I’ve been told that it costs about $1/sf per year. $3000/year for a 3000sf house. Std. homeowners fire/liability ins. is about $1000/ year. Banks don’t require earthquake ins. If you have it, why do you think you need it?

The next earthquake in the Bay Area is predicted to be a 7.5 on the Hayward fault. If you are on that fault or within 1000′ of any major fault it is a good idea to get EQ ins. If you are in a liquefaction area(like the SF Marina Dist) it is a must. If your house was built before 1940 it may not have anchor bolts(get it retro-fitted) and will also be expensive to repair(old historic jewel box homes cost a lot to fix)–get insurance.

For everyone else it may be a bad bet(after all most people do not have EQ ins). If the quake is less than a Richter scale 7.5, most homes will have less than 20% damage and will not covered because of the high deductible. If the quake is over 9.2 we will have over $500 billion in damage and the insurance funds will be wiped out. So insurance only covers a small percentage of quakes.

In a 7.5 quake or less–

If your house was built or remodeled post 1985 it was probably engineered and will have minimal damage.

1945-1985 one story houses on good soil will have minimal damage.

The 1945-1985 houses with the most risk are non-engineered(no drilled piers,no shearwalls, and weak cripple walls) two story houses, especially with stucco and tile roofs, especially on steep hillside lots. These kind of houses are heavy, plus the stucco may crack-off. The tiles may fall on you if you run out of the house. Houses on poorly compacted fill are also at risk in a big quake. And of course if you have an unlimited budget and own a mansion that cost you $1000/sf EQ insurance is a cheap source of piece of mind(even if you’ll never need it)

If you are going to spend $3000/year for rather limited coverage you might want to spend some money on an Engineer’s assessment of your risk and maybe pay some more to mitigate that risk—–like seismic retro-fitting..


About sfpeninsulaestates
Raleigh Real Estate - We Serve Clients, not just Locations John and Svetlana (Lana) Raleigh: the Raleigh Real Estate Team

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