The Bull Stops Here Blog

I know I blogged on this recently but I just had a client ask me about the viability of earthquake insurance. Her questions was, “I don’t feel we get much for the price we pay…”

My response…

1. What do you expect to get in return? Earthquake insurance returns your investment in only two ways.  First, in the event of an earthquake, your damaged property gets fixed. Second is peace of mind. It sounds like you are questioning paying premium for something that may never happen.  However, if it does, will you be unhappy you dropped it?
2. You can certainly shop your coverage for a competitive quote; you can increase your deductible to lower your premium; or you can decide that you are willing to self-insure the risk.  Those are the three options.
3. Earthquake premium is derived from age of the building, type of construction, location, total area, and value of the building.  Any one of these with a high risk (i.e. Brick construction or old building) can significantly affect the premium.
   

My recommendation to any of you is to first decide if you want to self-insure the risk.  If your risk tolerance can withstand an earthquake loss, then don’t but it.  If it can’t, then shop around to find the best possible option.

© 2010 Dan Weedin - All Rights Reserved

I’m helping a client with his personal insurance portfolio and the topic of earthquake insurance came up. His question, “Should I buy it?”  My answer, “It depends.”  “It depends” goes for you as well when considering earthquake coverage.  Here are a few questions you should ask yourself to find the answer…

1 - Earthquake usually comes with a significant deductible (10% of loss).  Are you able to tolerate that?

2 - Is your home in an area that is susceptible to a quake?

3 - Is your home on a cliff or hillside?

4 - Is your home’s replacement value in excess of $500,000?  The reason is that the higher valued the home, the more you may be able to afford the deductible AND the more damage you might sustain.

5 - Does this peril proverbially “keep you up at night?”

6 - What’s the construction type (frame, masonry, brick) of your home?  Frame is less expensive because it responds better to an earthquake.

Bottom line - talk with an insurance professional.  Discuss your options and weigh the cost of not doing anything.

Be safe,

© 2009 Dan Weedin - All Rights Reserved