Condo unit owners and renters tend to ignore earthquake insurance due to common misconceptions: condo unit owners think their units are fully covered under their Homeowners Association (HOA), while renters think the landlord has to deal with the issue.
Let’s start with condos: Generally, the unit owners and the HOA share ownership and responsibility for the losses to the common areas and structures. An association can assess each of the owners their share of the costs to rebuild or repair the common areas and structures – including damage caused by an earthquake.
The USGS predicts that in the next 30 years, there is an almost certain chance of a damaging earthquake striking somewhere in California, yet many HOAs are dropping the earthquake master insurance policy, leaving condo owners vulnerable to a large assessment.
Earthquake loss assessment coverage from the CEA can help pay for an assessment by the HOA for covered structures or real property damaged by an earthquake.
For example, if an insured is assessed $10,000 for windows and a roof that were damaged by an earthquake, CEA’s loss assessment coverage could pay for that assessment as long as the assessment was more than the specified deductible.
Condo unit owners may choose not to purchase CEA’s loss assessment coverage out of fear that the HOA will not rebuild after an earthquake.
Under certain circumstances, condo owners can be paid their lost market value for a condo unit that is not habitable because of covered earthquake damage if the HOA does not rebuild. See the “Reduction in Value of Your Ownership Interest” section of the loss assessment coverage for more information.
No condo unit owner should be without this valuable protection. With coverage limits up to $100,000 and deductibles ranging from 5 to 25 percent, you’re certain to help your client find a policy that meet their needs and budget.
Renters, on the other hand, often overlook the importance of renters insurance. It’s common for your client to dismiss purchasing a policy because they “don’t own the building, so why carry insurance?”
This would be an excellent time to let them know that their landlord’s policy won’t cover them. And even if they have an individual renters policy, it doesn’t cover earthquakes.
And, with the latest rate reduction, CEA Renters rates decreased by 38 percent on average, statewide. Let your clients know that policies start as low as $35 a year – or just $2.92 a month – even in higher risk areas.