Ask yourself the following questions:
- What is your risk profile: How close are you to a fault line? Do you have a slab or a post and pier foundation? Is the home wood frame construction? Is it a “soft story” home (living area built over a garage)? Are you on bedrock or fill? How much equity do you have in your home? Enter your address at www.abag.ca.gov to learn about the soil conditions and quake forecasts where you live Read at least one of the articles by financial experts at www.uphelp.org on equity considerations.
- Could you afford to pay out of pocket for repairs/rebuilding? What would you do if you couldn’t? Quake damage often requires engineering fixes which can be very expensive – typically $50k and up. Can you afford a policy with a 10 percent instead of a 15 percent deductible and if so – how much would the damage have to be before coverage would kick in?
- At what level of loss would the repair/rebuild of your home be an unacceptable financial burden? Most insurance policies have a 10 or 15 percent deductible. The price and high deductibles for EQ policies have led many people to avoid buying the product, but remember: if you live in a quake-prone region, going "bare" with no insurance means you have a 100 percent deductible…you'll bear the entire risk yourself.
- Can you afford not to have earthquake insurance? A generally accepted rule of thumb is that you should not risk more than 10 percent of your liquid assets. A large earthquake could mean:
- 10 to 100 percent of your home’s structure could be damaged or destroyed
- Up to 20 percent of your belongings could be damaged
- $3,000 a month for temporary rent and relocation costs