It’s a question I have asked myself a hundred times. Is earthquake insurance worth the money? I used to ask that question when I didn’t have earthquake insurance. I finally decided to buy it because I live in a high risk area for earthquakes. I’ve had the insurance for just over a year now and I still find myself asking whether it is worth it or not.
Here are the details of our insurance:
2700 square foot house
$460,000 valuation
Two story, wood built home on a flat lot
Insurance cost: $365 per year
Insurance deductible: $50,000 (yes you read that right)
As you can see, I’m not buying insurance to cover every little possible crack in the drywall that might happen. I’m really just insuring our home for the big one. If we were to experience a smaller quake, we wouldn’t even bother calling the insurance company. With such a high deductible, they wouldn’t even want to hear from us. I looked at policies with a lower deductible, but the lowest I could find was around $20,000 or so. I figured that I might as well drastically lower the premiums by choosing the higher deductible.
So, that begs the question. Is it really worth buying earthquake insurance? I’m basically paying about $30 per month for the peace of mind that if we were to have a massive quake, I’d still end up with a house after it was all done. After watching the catastrophe in Louisiana and the gulf coast and hearing first hand from my inlaws what it’s like to experience such a huge loss, I just don’t want to lose so much. We have a lot of equity in the house and I’d hate to lose it all due to a natural disaster like an earthquake.
What is your opinion? Do you have insurance that covers natural disasters? (In addition to your standard homeowners policy)
FWIW, none of the geology or geography profs at my (sf bay area) university had earthquake insurance. Said if it’s a small quake, not worth filing a claim, and if it’s a large quake, there will be disaster relief money available.
Don’t sue me when your house falls down…
I’ve heard from a friend what can happen with federal disaster relief, and what a mess it can be. So, I have earthquake insurance on a property that is not earthquake retrofitted. (Typical houses in Seattle are pretty old.)
Lisa,
That’s an interesting point of view, although I have to agree with sachilefever that dealing with the federal govt for disaster relief probably isn’t an enjoyable experience. (Not that dealing with an insurance company would be like eating apple pie). At least in the case of the insurance company, they would have an obligation to me.