Is Earthquake Insurance available in a condominium?

Is earthquake insurance the right thing for you?

The anniversary of the Loma Prieta Earthquake is coming up this Saturday, May 17th, 2015.  It’s a time of heightened awareness regarding earthquakes and usually pushes people to consider earthquake insurance and whether it makes sense for them.  Getting it for your home is a pretty easy thing to do, but what if you want it for your condo?  That’s the dilema for many condo owners.  Most (in San Francisco at least) home owners associations do not have earthquake insurance covering the condo common areas and buildings because it’s expensive, which would reflect itself in higher monthly home owners association fees.

I have had clients in the past who, at least initially, refused to look at condo buildings that did not have earthquake insurance-unfortunately, that limits the pool of available buildings.  In the end, you can 1) accept the buildings there are with earthquake insurance; 2) not buy a condo; 3) buy in a newer construction building up to current code and hope for the best; or 4) get over it and take a chance.  The following article was written in May of 2010, but it’s timeless in it’s message-I’ve had this same conversation with clients since I got into real estate in the mid-90’s.

Condo owners on shaky ground-San Francisco Chronicle

How to look for hazard insurance

Obtaining hazard insurance on property has gotten more difficult, so please get started immediately on securing hazard insurance on your property.  This is because of the extraordinary losses that insurance companies have paid out from disasters and mold claims.  Obtaining insurance for properties that are older, have brick foundations, are mixed use or commercial buildings, or multiple unit buildings can be even more challenging. 
Since lenders require hazard insurance to be in place prior to close of escrow; unknown claims discovered prior to close and after you are in a purchase contract could be frustrating and expensive should you not be able to close escrow until insurance is secured.  While you are in contract, the sellers through their agent, should disclose (or be asked to disclose) any claims on the property and if possible, order a CLUE report from their insurance carrier to disclose any claims that may have been made.  The seller can order one from www.choicetrust.com, or their insurance agent can provide one; we cannot get one on their behalf.

If you are purchasing a condominium, there is a master insurance policy on the complex and this is an issue of which you should not have the same concern as when you are buying the entire property.  You should still consider getting a condominium contents policy, however, to cover the contents in the case of fire, theft, or other disaster.  Be sure to note that you may need an ‘HO-6’ policy that would cover appliances, kitchen cabinets, fixtures and finishes.

When shopping for insurance, make sure you talk to several insurers.  Generally, you will have a better grasp on what are important features in policies by talking to multiple people because you’ll know what features and exclusions each policy have.  Here are some things to consider:

  1. Look for exclusions in coverage.  For example, rental property coverage is much more limited; you will need a specific landlord policy and perhaps a separate liability or umbrella policy.
  2. Earthquake insurance is extra if available.  It is offered by the California Earthquake Authority 30 days after you close escrow.
  3. Look for dollar limitations on claims.  Even if a policy claims to be guaranteed replacement, there are caps on the policy-find out what they are to avoid being under-insured.
  4. Special items of value might have to be scheduled separately; things like antiques, jewelry, computers, or firearms in order to be covered.
  5. If an insurer offers actual cash value, make sure you ask what this means.
  6. Understand the liability portion of your policy and what it covers and does not.  You may need a separate umbrella policy if it is not sufficient.
  7. Look at the deductible on your policy.  By raising it, you may be able to reduce your premiums.
  8. Discounts are generally given when multiple policies (i.e. house and auto) are issued by the same company-check into whether this is possible.
  9. Discounts are also sometimes given when you have smoke detectors, alarm systems, dead-bolt locks, etc…  Also see if group discounts are given.
  10. Many insurers may not insure properties that are not bolted to their foundations, do not have circuit breaking electrical systems, or are on brick foundations; this will limit the available insurers for your property, which may also be more expensive coverage.  For tough to insure properties, this may be a government sponsored plan, such as the California Fair Plan.
  11. Be sure to review your policy limits annually to stay up to date.  Insurance might have some sort of cost of living rider, but it is usually not sufficient to maintain adequate insurance coverage.
  12. Make your home safer and keep up maintenance.  Keep roofs in good repair, take care of items which could lead to a claim such as cracked and heaving sidewalk tripping hazards, consider seismic retrofitting.
  13. Be careful in the claims you make.  Insignificant work may be better taken care of out of your own pocket, rather than risk being canceled by your carrier, or making your property difficult to sell when a new buyer has to get insurance.
  14. For personal property, it would be unusual to have an insurer offer replacement value-be sure and ask.

Items in list above inspired by Realtor Online Magazine, reprinted with permission of the NAR, copyright 2003.  All rights reserved.

Will an insurance claim affect my sale?

Obtaining hazard insurance on property can sometimes be a challenge.  This is because of the extraordinary losses that insurance companies have paid out from disasters and mold claims.

Since lenders require hazard insurance to be in place prior to close of escrow, unknown claims discovered prior to close could be frustrating and/or expensive through a delayed close date, or renegotiating the purchase price should the buyer in contract on your property not be able to close escrow.

Its prudent to order a CLUE (Comprehensive Loss Underwriting Exchange)  report from your insurance carrier to disclose any claims that may have been made on the property over the last five years.  Your insurance agent, for a small fee, can order this document for you, or you can order it yourself online from www.choicetrust.com-you can obtain one free report a year by signing up on the site, which does require a social security number to order the report.

Water Pipe Leaks West Portal

This was sent to me through the Greater West Portal Neighborhood Association.  If water pipe leaks in the West Portal Area have affected you, please contact below.

Dear Neighbors,

CBS 5 is looking into a long series of water pipe leaks along the L
Taraval line. Residents have had to make costly repairs to pipes between the street and their homes, often multiple times. It’s possible these unusual instances of corrosion in copper pipes are due to stray current from the MUNI LRV’s.

Since we began investigating this issue in 2007, the city has been
reluctant to release information related to their own investigation,
and has most recently told us their probe was “inconclusive” and
that there is no written report. However, officials say letters went
out to about 200 households in the area asking if they had trouble, and inviting them to request help. The city says only 1 household responded. We have not found anyone so far who received this letter.

Have you received such a letter? Or, have you filed a claim for water pipe work? Or, have you received any compensation? Or, have you had to pay for your own repairs?

If so, please contact CBS 5 Producer Abby Sterling at 415-765-8972 or asterling@kpix.cbs.com.

Thank you.

Earthquake insurance for your condo?

Getting earthquake insurance for your condo?  That’s the dilema for many condo owners.  Most (in San Francisco at least) home owners associations do not have earthquake insurance covering the condo common areas and buildings because it’s expensive, which would reflect itself in higher monthly home owners association fees.  I have had clients in the past who, at least initially, refused to look at condo buildings that did not have earthquake insurance-unfortunately, that limits the pool of available buildings.  In the end, you can 1) accept the buildings there are with earthquake insurance; 2) not buy a condo; 3) buy in a newer construction building up to current code and hope for the best; or 4) get over it and take a chance.  The following article was written in May of 2010, but it’s timeless in it’s message-I’ve had this same conversation with clients since I got into real estate in the mid-90’s.

Condo owners on shaky ground-San Francisco Chronicle