Sound Off: Should I buy earthquake insurance?

A: There are a slew of factors to consider. Is the home on bedrock or landfill? What kind of construction materials are used, and what is their quality? Is the home already retrofitted for earthquake safety?

Due to the high cost of earthquake insurance, a majority of homeowners feel it’s not worth the cost. Premiums can start at $2,000 to $5,000 or more annually, depending on variables. However, there are numerous options available for consumers to separately protect their structure and personal possessions.

If you’re a condo owner, there are some HOA associations with earthquake insurance, but the majority do not. Check with your building. You can insure your personal possessions (a standard home insurance policy does not cover earthquake damage). I recommend looking at policy options that insure against receiving an association assessment in the event of major loss.

San Francisco is in the midst of mandatory earthquake retrofitting, but that only applies to certain buildings. Begin protecting your home now. Strap your hot water heater, and install a gas shutoff valve for fire safety. Make sure your home or condo building is free of dry rot or termites that feed on wood structure. One option is to have a pest inspection done once a year, and do their recommended work.

Some helpful websites: www. earthquakeauthority.com, www.myhazards.caloes.ca.gov, www.sf72.org.

Par Hanji, Paragon Real Estate Group, (415) 307-5110, par@parhanji.com.

A: For a private home that sells for about $1,000,000, expect to pay about $4,000 a year in earthquake insurance and about a $70,000 deductible.

The premium is steep, the deductible is high, and because of these economic realities, earthquake insurance only begins to pay off in the event of a major event. The last major one in the San Francisco area was in 1989 Loma Prieta quake. Contrast that to the nearly 400 magnitude-1.5 or greater earthquakes registered in the Bay Area this past year alone. I provide this data to the clients, letting them make whatever decision they are most comfortable with.

But it certainly seems more prudent, if choices need to be made on how funds are expended, to do earthquake retrofit work rather than to buy earthquake insurance. Retrofit work includes such items as bolting mud sills, installing shear walls, repairing substandard foundations and removing brick chimneys. Some cities, like Berkeley, refund up to a third of the city transfer tax if retrofit work is done.

For condo buyers, the earthquake insurance dilemma is actually simpler: If the complex does not carry earthquake insurance, the only thing the condo owner can buy is insurance for the interior of the individual unit. And if the complex does carry earthquake insurance, expect higher dues. Astrid Lacitis, Vanguard Properties, (415) 860-0765, astrid@vanguardsf.com.

A: In the Bay Area, most homeowners do not have earthquake insurance. We have found the following information most beneficial for our clients in deciding if they should purchase it. First of all is assessing the cost — the higher the risk, the more expensive the insurance.

If the property is located in a higher risk area, what sort of ground is it built on? Bedrock is more stable than sandy soil or fill. The quality and type of structure also plays a part in the risk.

You can usually buy earthquake insurance from your current carrier as an add-on to your existing policy. Get a quote, but also shop at competing insurers to find the best price. And lastly, and probably most importantly, consider mitigation — you can take steps to strengthen your house against earthquake damage by, for example, bolting the frame of the building to its foundation.

By reducing the likelihood of structural damage, mitigation can also reduce your premium. At the end of the day, there is no right decision, only the need to carefully evaluate what kind of risk each individual is willing, and can afford, to take.

Kathleen Daly, Caldwell Banker, (415) 925-3205, kdaly@cbnorcal.com; Lisa Lange, Coldwell Banker, (415) 464-3318, lisalange@coldwellbanker.com.