Earthquake insurance for the rich

Earthquake insurance for the rich

Earthquake insurance for the rich

Why the wealthy should consider earthquake insurance.

Why Older Homeowners Should Consider Earthquake Insurance

Why earthquake insurance becomes more beneficial when you pay your equity

Have you faithfully paid the mortgage on your primary home for the past 15 years? Just starting to feel like you’re making progress?

Be careful, you may be at increased risk from losing your hard-earned principal balance in your home if you live in earthquake country. While paying off your home is generally a good thing, there are new issues to be aware of. How exactly?

As you carefully pay off your mortgage and become wealthier, you slowly build up a “nest egg” in your nest (your home). However, many people expect to use this equity when they retire either by selling the home, refinancing, or possibly through a reverse mortgage.

But as you accumulate funds in your home, you need to make sure they are properly protected. Your home (owners) insurance should be solid, with a highly rated and reputable insurance carrier. It should be in the broadest form of coverage possible. However even the broadest form of home insurance excludes two primary perils. These two hazards can both be covered on separate forms: Flood and earthquake. Flood insurance should certainly be considered, and in high flood risk areas it is often required by the lender. But earthquake insurance is not required by banks. So I find it is rarely, if ever, considered.

Time to revisit it:

15 years ago, earthquake insurance was rarely sold and quite expensive. Times have changed. Earthquake insurance for most structures can be purchased through the California Earthquake Authority (CEA) and through several independent earthquake insurers such as ICAT, Geovera, Palomar and Arrowhead. There is more. These companies are now openly competing for your business. The landscape is slowly changing. Higher deductibles, separate deductibles, and extended coverages for things like pools have really made it more affordable and customizable.

How much is your Nest Egg worth to you?

If you truly expect to retire with the equity in your home, you need to be defensive. The best protection for a home is good insurance. California has had many devastating earthquakes in the past and will likely have more in the future. Although homes are built to much stricter codes and precautions, no home, despite what you may believe, is immune to all earthquakes. Demolition restoration of your home can take years and result in costs far beyond your wildest expectations based on the concept of rising demand. What is a demand spike? Increasing demand is the principle of spiraling costs as resources become more limited due to the size and scale of an event. Think it’s hard to hire a contractor now? Wait for half the city to be torn to shreds by a major earthquake.

Destruction not complete:

Many people mistakenly believe that just because your home was not destroyed by an earthquake, everything will be fine. Unfortunately from previous earthquakes, even if the earthquake doesn’t destroy your home, it can only slightly knock down the foundation and cause what is known as a red tag situation. If your home has been red flagged by a local authority officer, your home will need to be repaired before you are legally allowed to live there again. Do you and your spouse have enough money to rebuild your foundation? And live in a hotel for two years?

How to protect yourself:

Many homeowners believe that your best defense against an earthquake is to use your money to upgrade your home with the latest technology. Anchoring your home to the foundation, plywood, and the like. Others feel their money is best spent with earthquake insurance. However, both of these strategies involve doing something to protect your investment from some disaster. Simply ignoring it won’t make the future problem go away. A major earthquake is coming in California. I personally and professionally believe that the best protection is to do BOTH”: retrofitting your home to modern standards AND purchasing an earthquake policy with the maximum deductible you can afford.

A little preparation on your part can potentially prevent you from retiring in poverty. Consider all your options to help protect your nest.

Notes: Talk to a licensed contractor in your state when considering earthquake repairs to your home. Likewise, when considering adding, changing or canceling an insurance policy – always speak with a licensed agent in your state or jurisdiction. Insurance rules, regulations and forms of coverage may vary from state to state.

It’s Johnson independent insurance broker headquartered in Marin County, California. He is licensed to solicit and service insurance in the State of California only. CA License 0H11625.

#Earthquake #insurance #rich

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