Why the Affluent should consider seismic insurance.
Why older homeowners should consider seismic insurance
Because earthquake insurance becomes more useful when paying equity
Have you faithfully paid the mortgage on your main house in the past 15 years? Are you just starting to feel that you’re going on?
Watch out, you may be at increased danger to lose the main balance fought in your home if you live in the earthquake country. Although paying for your home is generally a good thing, there are new problems to keep in mind. How exactly is it?
As you pay your mortgage carefully and get richer, you slowly accumulate a “nest egg” inside your nest (at your home). However, many people expect to draw on that capital when they retire by selling the house, refinancing or possibly through a reverse mortgage.
But while you accumulate funds in your home, you need to make sure they are properly protected. Your home insurance (homeowners) should be solid, with a highly valued and respected insurance carrier. It should be in the widest possible form of coverage. However even the broader form of home insurance rules out two main dangers. These two dangers, both can be covered in separate forms: Floods and earthquakes. Flood insurance should certainly be considered and, in high-risk flood areas, it is often required by the lender. But earthquake insurance isn’t required by banks. Therefore I find it rarely ever considered.
It is time to consider it again:
15 years ago, earthquake insurance was rarely sold and quite expensive. Times have changed. Seismic insurance for most facilities can be purchased through the California Earthquake Authority (CEA) and through several independent seismic insurers such as ICAT, Geovera, Palomar and Arrowhead. There are more. These companies are now openly competing for your business. The landscape is slowly changing. Higher deductibles, separate deductibles and extended covers for things like swimming pools have made it really more convenient and personalized.
How much is your Nest Egg worth for you?
If you really expect to withdraw from equity at home, you must be defensive. The best defense for a home is good insurance. California has had many devastating earthquakes in the past and will likely have more in the future. Although houses are built according to much stricter rules and safeguards, no house, regardless of what you might believe, is impervious to all earthquakes. The destruction of your home could take years to rebuild and result in costs that far exceed your wildest expectations based on the Demand Surge concept. What is Demand Surge? Rising demand is the main cost of rising costs as res become more limited due to the size and scope of an event. Do you think it is difficult to hire an entrepreneur now? Wait until half of the city has been destroyed by a strong earthquake.
Destruction not completed:
Many people mistakenly believe that just because your home isn’t destroyed by an earthquake, everything will be fine. Unfortunately from previous earthquake experiences, even if an earthquake doesn’t destroy your home, it can simply turn the foundations upside down and trigger what is known as a Red Tag situation. If your home is tagged in red by a local government official, your home will need to be repaired before you are legally allowed to reside there. Do you and your spouse have enough money to rebuild your foundation? And do you live in a hotel for two years?
How to protect yourself:
Many homeowners are convinced that the best defense from an earthquake is to use their money to readjust their home with the latest technology. Attach your home to the foundation, plywood and the like. Others believe that their money is better spent with seismic insurance. However, both of these strategies involve doing something to protect your investment from a known disaster. Ignoring it simply will not allow the future problem to disappear. A major earthquake is coming to California. Personally and professionally I believe that the best defense is to make BOTH “: retrofil your home according to modern standards AND buy an anti-seismic policy with the maximum deductible you can afford.
A little preparation on your part can potentially prevent a poverty-stricken pension. Consider all your options to help protect your nest egg.
Notes: Talk to an authorized contractor in your state when you plan to do an earthquake renovation in your home. Likewise, when considering adding, modifying or canceling any insurance policy, always contact an authorized agent in your state or jurisdiction. Insurance rules, regulations and forms of coverage may vary from state to state.
Johnson is an independent insurance broker based in Marin County, California. He is authorized to apply for and provide insurance assistance only in the State of California. License CA 0H11625.
by Scott W Johnson