How is the market? Let’s Talk About Earthquakes – Ukiah Daily Magazine

The 5.8 magnitude earthquake that occurred in the Redwood Valley in June reminded many of us that we live in earthquake country. This inspired me to sit down with Rob McAsey of Mark Davis Insurance for a refresher course on earthquake insurance basics.

The coverage itself

In California, insurance companies licensed by the California Department of Insurance, referred to as “admitted” insurance companies, are legally required to offer earthquake coverage. Even though you may not like the rate or deductible, you can at least get some protection. In Mendocino County, as in the rest of the state, most earthquake policies are insured by the California Earthquake Authority, or, less commonly, GeoVera.

Policies can include coverage for structures, personal property, loss of use, and building code upgrades. Some options are standard, but others require an additional premium. For example, code upgrades are usually included with earthquake insurance, while loss of use coverage is not. Note: Most carriers require that your earthquake policy amount be the same as your homeowner’s policy amount, but some carriers will allow you to purchase a minimum if you choose.

Understand the opponent

Insurance deductibles represent the amount of damage you have to pay before insurance coverage kicks in. The standard deductible for earthquake insurance is 15%, which means that on a $1 million policy, you pay the first $150,000 of losses (a combination of damage to your residence and its contents if you have personal property coverage).

If your home is earthquake-resistant enough, you may qualify for a minimum deductible of 5%. The maximum allowed is 25%.

Loss of use coverage

For homeowners and renters, loss of use coverage is a provision that offsets the costs associated with having to live somewhere else due to a covered event, in this case, an earthquake. If direct damage from the earthquake forces you to leave your home for an extended period and you purchase coverage for loss of use due to the earthquake, expenses such as rent or hotel accommodations may be covered. If the earthquake causes a fire or flood, and the home is damaged because of it, your regular homeowner’s insurance will come into play.

If you are a landlord or own a commercial property that suffers earthquake damage, loss of use coverage can fill the gap caused by loss of rental income or loss of revenue due to the inability to conduct business.

Read the fine print

As I always say, big print gives and small print takes away. Be sure to read and understand your earthquake policy. Sometimes the sculptures will surprise you.

For example, California Earthquake Authority policies cap damage to a chimney at $10,000, a separate “sublimit” from the deductible. Keep in mind that coverage for your chimney only kicks in when you exceed the policy’s deductible, and costs associated with chimney repairs that exceed $10,000 come out of your pocket, regardless of whether you’ve met the total deductible. Earthquake insurance also does not cover structural damage caused by landslides or ground movement caused by an earthquake (although flood insurance may apply if water causes a slide).

Three exclusions apply to most insurance policies: acts of God, acts of terrorism, and acts of war – although some commercial policies now cover acts of terrorism. And be aware, if your policy is through a carrier that is not approved in California, you will not be protected by the California Insurance Guarantee Fund if that carrier goes bankrupt or refuses to pay.

After the vibration stops

In the immediate aftermath of a major earthquake, insurance companies usually have many people clamoring for their attention, so try to be patient. Keep records of any essential purchases that may be eligible for reimbursement. Also be aware that insurance companies impose a moratorium on new policies immediately after major events to prevent claims from being paid on policies purchased after the fact.

Once the dust settles, even if you don’t have any visible damage, it’s a good idea to have your home inspected. The inspector will pay special attention to wood stove exhaust, chimney pipes, brick chimneys, and brick foundations to make sure everything is in order. They will also check the plumbing under the house. Broken pipes do not always become apparent immediately; They become apparent only days later when water appears in the foundation or crawl space. If you notice a drop in water pressure, contact your water district. May indicate a broken line.

If you’re wondering whether you should get earthquake insurance, talk to your local insurance agent about it. They will provide you with advice tailored to your specific needs. As with many service industries, working locally is truly best, it’s best to work with someone you know and trust. Thanks again to Rob McCasy for sharing his expertise in this column.

If you have questions about property management or real estate, please contact me at [email protected] or call (707) 462-4000. If you have an idea for a future column, share it with me, and if I use it, I’ll send you a $25 gift certificate to Chat’s Bakery.

Dick Selzer is a real estate broker who has been in the business for over 50 years. The opinions expressed here are his own and do not necessarily represent his affiliated organizations.

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