Dear Liz: I live in Southern California and my homeowners insurance renews at the end of August. Should I consider buying earthquake insurance?
Answer: Insurance is meant to protect against catastrophic losses that we couldn’t easily pay out of pocket.
If you don’t have much equity in your home, or you’re willing to walk away from the equity you do have, then you can forgo earthquake insurance. Otherwise, you need the coverage.
The same is true for flood insurance, which is also not covered by the typical homeowners policy.
I read your advice that both earthquake and flood insurance are a must in Southern California. I discussed taking out earthquake insurance with my brother and his strong feelings about doing so were negative. His reasoning is because it is so expensive that most all of my neighbors won’t have it, and in the event of a catastrophic event, their homes won’t be rebuilt. Having mine rebuilt in a neighborhood where none are wouldn’t make sense as the property values all around me have sunk. Is this reasonable thinking?
Regarding flood insurance, wouldn’t that just apply to areas in low lying ground or flood zones. My home is on a hill …
Your neighbors may not be able to rebuild, but their properties will be sold to someone who can. An experienced insurance agent can help you shop for EQ insurance and evaluate your flooding risk.