by supercopy » Thu Apr 05, 2012 08:29 am
Hello,
My parents own a townhouse in earthquake country (CA); mortgage has been paid off. We're debating whether to purchase earthquake insurance for it.
One issue I have not seen any discussion about, is what happens when claims/repairs are somewhat dependent on neighboring units? These townhouses are attached to each other, 10 units per building. Our HoA buys a very limited form of fire+liability insurance for the complex (mostly covers exteriors and common areas. HoA is not required to, and has chosen not to, purchase earthquake insurance.
If a major quake damages the whole building, even if we had insurance, we would not be able to rebuild our unit by itself, if the neighbors to my left and right were not solvent and/or able to rebuild. After talking to many neighbors and the HoA, we know the vast majority are not insured against earthquakes. It's very expensive, has high deductibles, most choose to risk it.
Is it a standard rule that your insurer would pay your claim, even if you are not able to rebuild the unit? Do we need to look for any specific type of coverage, any weird keywords such as "extended content replacement" blah blah?
And, are we understanding this fine point correctly: earthquake insurance covers dwelling+property ("improvements" only), but not the land. In our case the land and the improvements are roughly equal in value, according to tax assessment. If the land becomes flooded/warped and no longer fit to rebuild upon, we would only get paid for the dwelling and covered property above the land? So, it only makes sense to buy coverage up to the value of the "improvements"?
My parents own a townhouse in earthquake country (CA); mortgage has been paid off. We're debating whether to purchase earthquake insurance for it.
One issue I have not seen any discussion about, is what happens when claims/repairs are somewhat dependent on neighboring units? These townhouses are attached to each other, 10 units per building. Our HoA buys a very limited form of fire+liability insurance for the complex (mostly covers exteriors and common areas. HoA is not required to, and has chosen not to, purchase earthquake insurance.
If a major quake damages the whole building, even if we had insurance, we would not be able to rebuild our unit by itself, if the neighbors to my left and right were not solvent and/or able to rebuild. After talking to many neighbors and the HoA, we know the vast majority are not insured against earthquakes. It's very expensive, has high deductibles, most choose to risk it.
Is it a standard rule that your insurer would pay your claim, even if you are not able to rebuild the unit? Do we need to look for any specific type of coverage, any weird keywords such as "extended content replacement" blah blah?
And, are we understanding this fine point correctly: earthquake insurance covers dwelling+property ("improvements" only), but not the land. In our case the land and the improvements are roughly equal in value, according to tax assessment. If the land becomes flooded/warped and no longer fit to rebuild upon, we would only get paid for the dwelling and covered property above the land? So, it only makes sense to buy coverage up to the value of the "improvements"?
Posted: Fri Apr 06, 2012 12:43 pm Post Subject: Earthquake insurance for townhouse
Contact your HOA and ask them to arrange for earthquake coverage, since your parents’ townhouse is in an earthquake prone area.
Let me know, if your parents have a HO-6 policy for the townhouse. What they can do is that, they can purchase an optional rider for earthquake coverage, to go along with their home insurance policy.
Yes, if you have the proper coverage, you’ll get paid for the dwelling and the covered property above the land. Home insurance policies usually don’t pay for the land damages. Home appraisals can be done at intervals to count in the ‘improvements’ later on as well, and your insurance policy can be updated accordingly.
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