Earthquake insurance

[georgebushmoron]

My home insurance has come up for renewal. Once again I have to think about earthquake insurance. Never had it in Seattle. Probably won't get it here, but for some reason I'm extra paranoid now because climate changes have been extreme lately.

Earthquake insurance is a whopping 40% more on the premium. I figure if there was a strong enough one, all the houses would be shaken down and the insurance company would declare bankruptcy because they would not be able to pay out the insurance, so the money spent on premiums is for naught.

Tell me if my reasoning is flawed, please. Do you have earthquake insurance for your home? Is your home a condo, townhouse or self-enclosed residential unit?

Do you think it's a scam formulated by chinless actuarial dweebs?

 

[therealrex]

Who would they pay it to when the big one hits you're all going to be at the bottom of the ocean anyway

 

[Jack Tripper]

umm

I always figured that if government help, i.e. disaster assistance, is going to be paid out, it would be paid out to the people who actually had earthquake insurance first. I could be way off but it's a thought.

Seattle had a small earthquake which did 2 million damage to Pioneer Square a few years back. An earthquake may not wipe out the whole city but could still do damage.

A total loss of your home including contents and building could equal hundreds of thousands. $500,000 loss makes $600 a year seem kinda small.

ING has some pretty good deals if you are claims free,over 50 etc. I would check em out. Wawanesa not bad either.

Most companies do not apply discounts to earthquake premiums but a few companies do, which can help a lot.

Make your broker print out a quote from several different companies too. Don't just take his word for it. Agents are busy and often just renew without checking.

 

[twoblues]

Do you actually expect a pay out when/if the earthquake hits? What if the insurer goes broke? Happened before with hurricane/flood insurers, I believe?

 

[jjinvan]

A while back there was a big hurricane in Florida (I think it might have been Andrew but I'm not 100% sure on that one) and many of the miami beach hotels got hit. Several insurance companies shut down and most of the hotels didn't collect a penny.

Similarly, how many people in New Orleans do you think collected on their flood insurance policies?

As far as the government goes... I know that in Canada, it would be the people who did NOT have insurance that would get government help first, if anyone got any.

I have earthquake insurance because my bank insisted that I get it. Otherwise I wouldn't bother with it because the odds of actually collecting are basically zilch.

 

[sdw]

It's unlikey that they'll go broke, insurance companies generally off load part of the the risk to 3rd parties to ensure they aren't too exposed to one major catastophe.

The history of Insurance Companies paying when a major disaster hits is pretty dismal.

Nobody involved with the World Trade Center or any of the events on 911 has been paid by an insurance company. What money the 911 victims got was raised through charity and supplied by government.

The Insurance Companies are also still in court trying to avoid paying the victims of Katrina.
http://blogs.usatoday.com/ondeadline/2007/01/judge_blocks_ka.html
http://www.safeguardproperties.com/content/view/1504/106/
http://commonlaw.findlaw.com/2007/01/katrina_insuran.html

The San Francisco Earthquake and Los Angeles Earthquake were the same thing.
http://www.sonnenschein.com/practice_areas/insurance/index.aspx
http://www.sbd-law.com/Bio/JoelCohen.asp

As with anything that predates 1995, I've had to link Lawyers boasting about their work and not news stories.

The reality of Home Insurance is pretty basic:
Fire Insurance is paid if it's not associated with a disaster.
Theft Insurance is paid if it's not associated with a disaster.
Liability Insurance is paid if it's not associated with a disaster.
Flood Insurance will never be willingly paid.
Hurricane Insurance will never be willingly paid.
Earthquake Insurance will never be willingly paid.

If you have a mortgage on your house, your mortgage holder will likely insist on you having complete insurance coverage.

If you own your house, price the disaster insurance and put that amount into a bank account. The probabilities are that over the lifetime of your home you will never have to write a check on that account. However, you will be the only person on your block to have money the day after the disaster. Money is always power and always gives you options. The person that has available money the day after a disaster will do much better than the person that has to find money to pay a Lawyer to sue the Insurance Company to get money after 10 or more years.

 

[metoo113]

My home insurance has come up for renewal. Once again I have to think about earthquake insurance. Never had it in Seattle. Probably won't get it here, but for some reason I'm extra paranoid now because climate changes have been extreme lately.

Earthquake insurance is a whopping 40% more on the premium. I figure if there was a strong enough one, all the houses would be shaken down and the insurance company would declare bankruptcy because they would not be able to pay out the insurance, so the money spent on premiums is for naught.

Tell me if my reasoning is flawed, please. Do you have earthquake insurance for your home? Is your home a condo, townhouse or self-enclosed residential unit?

Do you think it's a scam formulated by chinless actuarial dweebs?

What extreme climate changes have you experienced?

 

[sdw]

Whatever, ultimately it's a judgement call. My experience is that very few, especially those in the asset accumulation phase with high mortgages, are in a position to squirel away money on contingencies unlikely to happen. But apparently you know different, or have a different take on human nature. Fair enough.

I'm no fan of insurance companies by and large, but they do serve a purpose. The probability of someone dying before they are 50 is low as well but if it happens and there's no life insurance, the surviving family members are screwed. Same thing applies to disability insurance, nothing like trying to support someone how is phyisically or mentally incapacitated for 20-30 years to play havac on one's finances. I'm not a fan of insurance companies per se but from a risk management perspective you take your chances one way or the other.

Obviously the chances of dying or being disabled are low, the insurance company pretty much knows how many people aged 50 will die in BC next year and price their policies accordingly. What they don't know is who will die. changes are it wouldn't be you, but insurance is all about pooling the risk, and providing the insurance companies with a profit. One doesn't have to play the game, but they those that don't should consider the consequences. Certainly unmarried individuals for example don't need life insurance, but put two of those unmarried people in a relationship and add a child and the story changes.

As for 9-11 etc, I'm not surprised the insurance companies wouldn't willing pay out for that, how many buildings had terrorist coverage. Just because something tragic happens doesn't always mean an insurance payout is mandatory. It does matter what is and isn't covered.

http://www.consumerwatchdog.org/nw/?postId=1522&pageTitle=On+shaky+ground;

http://en.wikipedia.org/wiki/1989_Newcastle_earthquake

I thought I was clear that if you have a mortgage, you are not likely to have much choice about being required to carry insurance.

I always have fire, theft, malicious damage and liability insurance on any building. I also have life, medical and disability insurance. Anybody who doesn't is a fool. It would be like driving a car without liability insurance, you are done for life if you lose the bet.

Disaster insurance is different. As I pointed out, insurance companies don't have a great history of paying in a timely manner when a disaster hits.

 

[jjinvan]

You might want to look at your policy closely. Usually the deductable for earthquake is a percentage of the entire value of the insured property.

If it was a percentage of the assessed damage, that means that if you have a little rumble and a $5 plate falls on the floor, you can file a claim which will cost them at least $100 to process and you'll get a couple of bucks; doesn't make sense does it?

 

[slacker]

I believe Canadian Direct includes earthquake for free. I wanted to go with them but they were dicks about some (non) issue on a previous property and I gave up on them.

I do have earthquake insurance now on my home as I am heavily invested in it and there is no way I could afford to rebuild if it was totaled. I feel safer with the policy given the level of investment. On past homes they were not worth as much so I didn't really care so didn't have coverage. I think I'm getting screwed on the earthquake insurance on my current policy so I'll have another look at Canadian Direct or someone else in the future again.

Insurance underwriters shouldn't just be insuring one area either, they should be insuring a wide geographic area such that a disaster in one area shouldn't wipe out the contingency. Of course I have also thought getting a payout might be an issue too but haven't really had the time to look into it in detail.

 

[Quarter Mile'r]

Simple really George, look at it this way.

Insurance company's are in it to make money and in the scenario of a major quake where say a city could get levelled, I doubt if the company's are going to be around to cough up in that regard.

All they'd have to do is claim bankruptcy. That's it !

Just pray to what ever god you believe in and hope for the best if the
big one hits.

Example....if Richmond gets nailed it will have the phenom known as
liquifaction happen to it. Okay......when Richmond sinks in quicksand how
do you suppose they will be able to reserect it??

Interesting scenario say WOT??


...........QM'r

 

[georgebushmoron]

Maybe. But I went home a reviewed my insurance policies. One policy charges me an extra $28 for earthquake coverage and the other one has earthquake coverage included in the premium. Both have a deductible of 5% of the assessed damage. Nothing strikes me as unreasonable and in my case the insurance premiums are deductible so all and all, it's very cheap coverage. If we were talking about $100's or $1000's of dollars a year for coverage I might have a different opinion, but the one the includes coverage was the best policy I could find for coverage of a rental unit, the earthquake insurance part of it was simply a bonus.

Care to tell me who charges you only $28 for earthquake coverage?? I got quoted $300!!!

 

[georgebushmoron]

Simple really George, look at it this way.

Insurance company's are in it to make money and in the scenario of a major quake where say a city could get levelled, I doubt if the company's are going to be around to cough up in that regard.

All they'd have to do is claim bankruptcy. That's it !

Yeah, if the earthquake was big enough, it would level the insurance company too, then the fuckers will never pay.

Just pray to what ever god you believe in and hope for the best if the
big one hits.

I wish Satan was real. Cuz if he was, it would make sense all the misery in the world. But then you could choose to worship him, and perhaps I would if I could get him to wipe out Canada Revenue Agency and the insurance companies. Perhaps he could reintroduce the Black Plague on just the people who work there. Sell my soul to the devil. Yeah, that's it. Better than being raped by the insurance companies.

 

[Quarter Mile'r]

georgebushmoron;617785]Yeah, if the earthquake was big enough, it would level the insurance company too, then the fuckers will never pay.

Would be interesting too to see how the Parliamentary process would chime in, in such a case!

You know....disaster relief and such.
Well the army would be there for sure to keep control of all the looting
and what ever is left.
Oh and maybe......just maybe.........a soup kitchen or two for
all of us on the "left" Coast !!!

I wish Satan was real. Cuz if he was, it would make sense all the misery in the world. But then you could choose to worship him, and perhaps I would if I could get him to wipe out Canada Revenue Agency and the insurance companies. Perhaps he could reintroduce the Black Plague on just the people who work there. Sell my soul to the devil. Yeah, that's it. Better than being raped by the insurance companies.

Pretty much sums it up I would think too. Well said !


...........QM'r

 

[mick_eight]

They win, you lose. Its all very simple.

 

[LonelyGhost]

Yikes ... um, my Earthquake insurance covers stuff like,
we have a little shaker and a gas line breaks and my house
burns down ... sure, should be covered under my fire policy
but guess what? not if its caused by an earthquake!

second little rattler ... window breaks ... should be covered
by my policy ... but not if it was caused by an earthquake!

Its not the fact that 'the big one' (damn I miss Redd Foxx)
would level everyone's homes, but that damage done by
the little ones may not be covered by the other parts of
your policy if you don't have the earthquake insurance.

my 'premium' is $151 with a 5% deductible ...

 

[georgebushmoron]

my 'premium' is $151 with a 5% deductible ...

WHAT??? Why is my premium $950 with a $500 deductible?? Which insurance company do you use?

 

[jjinvan]

WHAT??? Why is my premium $950 with a $500 deductible?? Which insurance company do you use?

Your premium is probably high because you have a tiny deductible. You also might be in a higher risk area for earthquakes.

a 5% deductible on a typical Vancouver home would be about $20,000 or so.

 

[Sonny]

Most property insurance policies have both a deductible and a co-insurance percentage. THe insurance covers only the value of the building as the land itself is never insured.

An average deductible amount is $1000, which means the homeowner pays for the first $1000 of a claim. So, if the claim is $1000 or less, don't bother contacting the insurance company because you are paying for all of the damage.

Co-insurance is frequently 90% which means the homeowner pays for the remaining 10% of whatever damage there is. If a million dollar home were to burn to the ground then the insurance company would pay $900,000 less the $1000 deductible for a net of $899,000. The homeowner is out $101,000.

So do not think that insurance covers your ass 100%. You can buy policies with 100% coverage but the premium is more. BTW always insure your digs for replacement value.

 

[kalel]

gbm:

look at it this way - if you don't get the earthquake insurance simply set your house on fire 2 minutes before the earthquake starts doing damage. that way you can say the house burnt down instead of being damaged due to the quake.

i live in richmond and 1/2 the companies won't even sell you quake insurance here.