EARTHQUAKE

Earthquake insurance is optional and is not mandated by any associations’ governing documents or by California Law. Individual unit owners can purchase their own residential earthquake policies, but those policies will not cover the exteriors of the units or the community’s common areas.

Earthquake insurance is expensive and deductibles are high; however, associations should consider what will happen in the event of an earthquake if the homeowners can’t afford to repair the damage in the absence of earthquake insurance.

If your association has earthquake insurance, it’s important to be sure that the Total Insurable Value (or estimated replacement cost) of the buildings is up-to-date in your policy. This is especially important if you have done upgrades. If the replacement cost is undervalued, you could incur large out-of-pocket expenses to make up the difference before the carrier will pay for damage repairs.

Don’t wait until the next earthquake to think about it. As experts in insurance for common interest developments, we would be happy to make a presentation to your HOA board and/or association members to discuss the pros and cons of earthquake insurance and let you know what coverage is available and how it works.