California Earthquake Insurance

Disaster Insurance Experts

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Condo Earthquake Insurance, HOA

Unlike homeowners, condo dwellers don’t own the building they live in or the land it sits on. Your condo or homeowners association (HOA) will carry a master policy to insure the building and pay for accidents that occur on outside property or in common areas.

However, your HOA might not pay to repair the inside of your unit after disasters, nor will it replace your damaged or stolen belongings or cover liability costs if guests are injured in your condo. That’s why it’s smart to protect yourself with personal condo insurance, also called an HO-6 policy.

In this article

HOA vs. condo insurance

What does condo insurance cover and not cover? – earthquake

How much does condo insurance cost?

How much condo insurance should I buy?

HOA vs. condo insurance

To better understand how individual condo insurance and your HOA’s master policy differ, here are common instances when each coverage typically kicks in.

When you need condo insurance

  • There’s damage to the interior of your unit. As a condo owner, you don’t own the building. But you do own your unit, often including fixtures such as lighting, cabinets and appliances. Whether you need to insure your unit’s interior comes down to what kind of master policy your HOA carries. If the HOA has what’s known as an “all-in” HOA policy, it typically will cover all the original items built into your place, like the aforementioned cabinetry, lighting and other fixtures, plus things such as plumbing and wiring. However, if the HOA has what’s called a “bare walls” or “walls in” HOA policy, it’s up to you to insure everything in your living space besides the walls, floor and ceiling.
  • Your belongings are stolen. The HOA’s insurance won’t cover your belongings, such as furniture, computers and clothing. You’ll need to file a claim through the personal property coverage on your condo insurance if your possessions are damaged or stolen.
  • A guest gets hurt in your home. If a visitor trips and falls on a staircase inside your unit, personal condo insurance can help cover his or medical bills and your liability costs if you’re sued.
  • You can’t live in your condo due to damage covered by your policy. If fire damage or another issue covered by your personal condo insurance policy makes your unit uninhabitable, the insurer will pay for expenses related to living elsewhere, such as hotel room bills.
  • The damage exceeds the HOA’s policy limit. If your HOA surpasses the limits of its master policy — say, repairing major hail damage to the building — each unit owner might need to contribute funds to make up the difference. If you have “loss assessment” coverage on your condo insurance, this sum may be partially or totally covered.

What HOA insurance is typically responsible for

  • Damage to the building exterior. Condo owners usually aren’t responsible for, say, repairing the roof after a storm, fire or other disaster.
  • Damage to common areas and shared amenities. Common areas generally fall under the HOA’s jurisdiction, including the land outside the building, tennis courts, lobby, elevators and hallways.
  • Injuries guests sustain in common areas. If a visitor is injured on an icy walkway outside the front door to the building, your HOA’s insurance covers the liability costs in case of a lawsuit.

What does condo insurance cover and not cover?

Below are some of the common problems that are and aren’t included under a typical condo insurance policy.

Will pay for Won’t pay for
Fire and smoke Earthquakes
Explosions Floods
Wind and hail Intentional injuries to others
Theft Nuclear hazards
Vandalism Damage from birds, rodents, and insects
Lighting Wear and Tear
Burst pipe Damage from underground water  (such as sewer backup)

How much does condo insurance cost?

On average, condo insurance costs roughly $200 to $500 per year and adding on earthquake will double this on average. The following may affect your price, especially earthquake rates.

  • Where you live.
  • Construction materials used for your condo.
  • How much your HOA’s insurance covers, if any.
  • Coverage options and limits you choose.
  • Your deductible amount.

How much condo insurance should I buy?

To figure out the amount of personal property coverage you need to replace all your stuff, take a home inventory. That can be a lot of work, but you can use an inventory app such as this one from the Insurance Information Institute, an industry organization.

When it comes to the interior of your unit, add up what the cost would be to replace everything walls in.

HOA policies won’t cover anything inside your walls, even plumbing and wiring, meaning you need to add more items into your coverage calculation.

It’s difficult to make blanket recommendations about condo policies because state laws and HOA bylaws differ from case to case. Talking with a licensed insurance agent is the best way to get coverage suggestions for your situation. California HOA master policies do not cover any of the wall in. You must get your own coverage.

Many potential shoppers for condos will pass on buying a unit without the HOA master policy having earthquake. If your condo building is lost in and earthquake, the building portion you own will be a complete loss.

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Compare Earthquake Coverage Package Options

Coverage Type Basic Protection Comprehensive Protection
Dwelling Damage to the dwelling structure covered up to the Coverage A limit. Includes sublimits and exclusions for some types of property. Same as Basic Protection
Other Structures Damage to appurtenant structures covered up to 10% of the Coverage A limit. Includes sublimits and exclusions for some types of appurtenant structures. Coverage for swimming pools is limited to $3,000. Same as Basic Protection with coverage for swimming pools increased to $25,000.
Personal Property Damage to personal property covered up to 50% of the Coverage A limit. Includes sublimits and exclusions for some types of property. Same as Basic Protection with sublimit coverage increased in several categories.
Loss of Use Loss of Use coverage provided up to 20% of the Coverage A limit or $25,000 whichever is less Loss of Use coverage provided up to 20% of the Coverage A limit or $100,000 whichever is less
Building Code Upgrade Provides coverage for up to $10,000 if the dwelling meets the definition of earthquake hazard reduction. Same as Basic Protection.
Loss Assessment Provides coverage up to $10,000 for loss assessment. Same as Basic Protection.
Deductibles 5%, 7.5%, 10%, 15%, 20% and 25% deductibles available. Deductible applies separately for Coverage A, B, C and E. No deductible for Loss of Use Coverage. Same as Basic Protection.

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Flood Insurance Rate Zones for Homes

Zone A

Zone A is the flood insurance rate zone that corresponds to the 100-year floodplains that are determined in the Flood Insurance Study (FIS) by approximate methods. Because detailed hydraulic analyses are not performed for such areas, no BFEs or depths are shown within this zone. Mandatory flood insurance purchase requirements apply.

Zone AE and A1-A30

Zones AE and A1-A30 are the flood insurance rate zones that correspond to the 100-year floodplains that are determined in the FIS by detailed methods. In most instances, BFEs derived from the detailed hydraulic analyses are shown at selected intervals within this zone. Mandatory flood insurance purchase requirements apply.

Zone AH

Zone AH is the flood insurance rate zone that corresponds to the areas of 100-year shallow flooding with a constant water-surface elevation (usually areas of ponding) where average depths are between 1 and 3 feet. The BFEs derived from the detailed hydraulic analyses are shown at selected intervals within this zone. Mandatory flood insurance purchase requirements apply.

Zone AO

Zone AO is the flood insurance rate zone that corresponds to the areas of 100-year shallow flooding (usually sheet flow on sloping terrain) where average depths are between 1 and 3 feet. The depth should be averaged along the cross section and then along the direction of flow to determine the extent of the zone. Average flood depths derived from the detailed hydraulic analyses are shown within this zone. In addition, alluvial fan flood hazards are shown as Zone AO on the FIRM. Mandatory flood insurance purchase requirements apply.

Zone AR

Zone AR is the flood insurance rate zone used to depict areas protected from flood hazards by flood control structures, such as a levee, that are being restored. FEMA will consider using the Zone AR designation for a community if the flood protection system has been deemed restorable by a Federal agency in consultation with a local project sponsor; a minimum level of flood protection is still provided to the community by the system; and restoration of the flood protection system is scheduled to begin within a designated time period and in accordance with a
progress plan negotiated between the community and FEMA. Mandatory purchase requirements for flood insurance will apply in Zone AR, but the rate will not exceed the rate for unnumbered A zones if the structure is built in compliance with Zone AR floodplain management regulations.
For floodplain management in Zone AR areas, elevation is not required for improvements to existing structures. However, for new construction, the structure must be elevated (or floodproof for non-residential structures) such that the lowest floor, including basement, is a maximum of 3 feet above the highest adjacent existing grade if the depth of the base flood elevation (BFE) does not exceed 5 feet at the proposed development site. For infill sites, rehabilitation of existing structures, or redevelopment of previously developed areas, there is a 3 foot  levation requirement regardless of the depth of the BFE at the project site. The Zone AR designation will be removed and the restored flood control system shown as providing protection from the 1% annual chance flood on the NFIP map upon completion of the restoration project and submittal of all the necessary data to FEMA.

Zone A99

Zone A99 is the flood insurance rate zone that corresponds to areas of the 100-year floodplains that will be protected by a Federal flood protection system where construction has reached specified statutory milestones. No BFEs or depths are shown within this zone. Mandatory flood insurance purchase requirements apply.

Zone D

The Zone D designation on NFIP maps is used for areas where there are possible but undetermined flood hazards. In areas designated as Zone D, no analysis of flood hazards has been conducted. Mandatory flood insurance purchase requirements do not apply, but coverage is available. The flood insurance rates for properties in Zone D are commensurate with the uncertainty of the flood risk.

Zone V

Zone V is the flood insurance rate zone that corresponds to the 100-year coastal floodplains that have additional hazards associated with storm waves. Because approximate hydraulic analyses are performed for such areas, no BFEs are shown within this zone. Mandatory flood insurance purchase requirements apply.

Zone VE

Zone VE is the flood insurance rate zone that corresponds to the 100-year coastal floodplains that have additional hazards associated with storm waves. BFEs derived from the detailed hydraulic analyses are shown at selected intervals within this zone. Mandatory flood insurance purchase requirements apply.

Zones B, C, and X

Zones B, C, and X are the flood insurance rate zones that correspond to areas outside the 100-year floodplains, areas of 100-year sheet flow flooding where average depths are less than 1 foot, areas of 100-year stream flooding where the contributing drainage area is less than 1 square mile, or areas protected from the 100-year flood by levees. No BFEs or depths are shown within this zone.

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Frequently Asked Questions about Earthquake Insurance – FAQ

Why Do I Need Earthquake Insurance?
Most homeowners, mobilehome, condo, and renters policies don’t cover earthquake damage.

There are 2,000 known faults crisscrossing California, and on average, according to the official California Multihazard Mitigation Plan:

  • Moderate earthquakes (magnitude 5.5) hit California 3 to 4 times a year.
  • A strong earthquake (magnitude 6 to 6.9) hits California every 2 to 3 years.
  • A major earthquake (magnitude 7 to 7.9) hits California about every 10 years.

Will I be able to rely on the government to bail me out after an earthquake?
Not always. Today, even if a resident qualifies for a disaster grant, it may not cover the cost to repair or rebuild. Disaster loans, if available, are limited and must be repaid—their intent is to help you get back into your home, not to offer enough funds for you to rebuild or fully replace your property. After the August 2014 South Napa Earthquake, federal assistance for individuals wasn’t offered for nearly two months after the quake hit.

I own my condo. Are there coverage options for me?

Condo owners have unique needs. Condo association master earthquake policies usually don’t cover damage to your personal belongings or damage to the inside of your home. And while some associations may cover earthquake damage to a condo building’s exterior, many also require owners to pay a portion of the repair costs or the association’s policy deductible (known as a Loss Assessment).

I rent, so will my landlord’s policy cover my belongings?

No. If you rent, you need a separate renters policy for your own personal belongings. Renters earthquake insurance insures personal property such as TVs and furniture with a flat $750 deductible, and covers additional living expenses up to $25,000 with no deductible. Beginning January 1, 2016, you’ll be able to choose from 5, 10, 15, 20 and 25 percent deductibles. And you will be able to choose additional living expense coverage of up to $100,000, still with no deductible.

Do you offer any discounts if my home has been earthquake retrofitted?
Yes. CEA policyholders who have retrofitted their house to withstand earthquake damage will receive a 5 percent premium discount if their house meet the following requirements:​​​

  • Built before 1979.
  • Wood-frame construction-type.
  • Built on a raised foundation.
  • Frame is bolted to the foundation.
  • Home has cripple walls, and they are braced with plywood or its equivalent.
  • Water heater is secured to the building frame.
  • Homes built on a concrete-slab or combination-type foundation do not qualify.

Beginning January 1, 2016, select retrofitted houses may qualify for up to a 20 percent Hazard Reduction Discount on their policy premium.

How likely is it that your home will be damaged in an earthquake?

  • Consider your home’s distance to fault lines.
    How close is your property to a fault line or fault line system? Visit the United States Geological Survey’s interactive fault map which illustrates faults that were believed to be sources of earthquakes of magnitude 6 or greater and know that new faults continue to be discovered. Don’t forget the August 2014 Napa quake surprised both residents and earthquake research experts alike, since this major fault in a highly populated area was not previously known to exist.
  • Consider your property’s construction features.
    Wood frame homes with crawlspaces, multi-level homes and older homes have a higher risk of suffering severe damage from a large magnitude earthquake. Typically, newer homes or homes that are retrofitted to withstand an earthquake will suffer less damage. However, even homes retrofitted to meet the most recent code requirements may suffer damage from a strong quake.

Can you afford to repair or rebuild your home if it’s severely damaged?

Without insurance, you may face a heavy financial burden if your home is severely damaged in an earthquake since typical homeowners policies do not protect against this peril. In the process of waiting for any assistance, you may also need to find somewhere to live and some way to pay unexpected living expenses out of pocket.

Can you afford to live somewhere else while your home is being repaired?

If a large-magnitude earthquake strikes your area, leaving your home uninhabitable, where will you go? Will you be able to afford a place to stay until you are back on your feet? At a time when lodging and housing prices will skyrocket if a large earthquake wipes out a populated area, this could prove to be very difficult.  Earthquake insurance policies can also provides coverage for Additional Living Expenses to help with increased housing expenses following a catastrophic event.

Can you afford to lose all your equity in an instant?

If you live in an earthquake prone area, you are taking a huge risk of losing all of your equity if your home remains unprotected by earthquake insurance. Do you really want to gamble with your future? It takes just a few minutes to get a quote and purchase earthquake insurance policy online from the leading provider of stand alone residential earthquake insurance.

Will the government “FEMA” help bail me out after an earthquake?

Many homeowners think the government will be there to cover the financial burden when their home is a total loss due to a catastrophe. While FEMA is designed to offer individuals emergency assistance after a large catastrophic event, they are not going to repay all the equity lost to homeowners who suffered major losses. If you are faced with this devastating situation, you may be lucky to receive financial assistance in the form of government loans to help get you back on your feet, but these loans only provide a maximum of $200k with a long delay in receiving funds, must be repaid, and may come with tax implications. You will still be without the equity you worked so long and hard to earn, and be forced to face the fact that you must start rebuilding your financial nest egg from scratch.

My home is newer so it’s not at risk of being damaged, should I be worried?

All structures are at risk of experiencing severe structural damage during a major earthquake. A large magnitude earthquake 7.0 or greater is capable of causing billions of dollars in damage, regardless of how new your home is or how much retrofitting was in place. The more efforts you put into protecting your home from damage caused by the ground shaking, the higher the chances that your property will stand strong during small and medium sized shockers. However, there is never a guarantee that any structure will survive a large magnitude earthquake, no matter what year it was built.

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Should I Buy Earthquake Insurance for My Home or Business?

In 2014 the U.S. Geological Survey issued an updated version of its National Seismic Hazard Maps. These maps provide an estimate of the location, frequency and intensity of future earthquakes in the United States.

According to the USGS, 42 states in the U.S. have a “reasonable chance” of experiencing damaging ground shaking within the next 50 years. Sixteen states have a relatively high risk of experiencing a damaging earthquake.

 

Excluded Peril

Earthquake is an excluded peril under virtually all commercial property policies. In many policies, earthquake is excluded in conjunction with earth movement. The exclusion typically precludes damage caused not only by an earthquake itself but also by any earth sinking, rising or shifting that is related to an earthquake.

Why don’t commercial property policies cover damage caused by earthquakes? The reasons have to do with predictability, the potential for large losses and the spread of risk. Large quakes occur infrequently, are impossible to predict and can cause catastrophic losses. Also, earthquake risks are not spread evenly among policyholders. The concentration of risks and the uncertainty about future losses make earthquake a difficult peril to insure profitably.

Still, some insurers do offer earthquake coverage. These insurers have protected themselves against large quake losses via reinsurance or other financial mechanisms.

Fire or Explosion Following an Earthquake

While damage to property covered by an earthquake itself is excluded under a typical property policy, most policies cover ensuing loss caused by a fire or explosion.

 

That is, they cover loss or damage caused by a fire or explosion that results from an earthquake. This coverage is usually provided as an exception to the earthquake exclusion.

Suppose you own a building that is insured under a commercial property policy. Your policy contains the typical “earth movement” exclusion.

Three months after your policy takes effect your area is rocked by an earthquake. The quake does not damage your building but it ruptures a gas pipe near your property. Leaking gas ignites, triggering a fire that consumes your building. Because the damage to your building was caused by the fire and not the earthquake itself, the damage should be covered by your property policy.

Earthquake Insurance

If you are interested in purchasing earthquake insurance, contact your insurance agent or broker. Earthquake coverage may be available via an endorsement to your existing property policy. If your property insurer does not offer an earthquake endorsement, you may be able to purchase a separate earthquake policy from a different insurer.

Your insurer may use either of two standard ISO earthquake endorsements, which include both volcanic eruption and earthquake as covered perils. Alternatively, your insurer may utilize its own earthquake endorsement or policy form.

What to Look For

Whether you buy earthquake coverage as an endorsement or a separate policy, review your coverage carefully. Here are some provisions to look for.

  • What constitutes an event? Earthquake coverage typically specifies a time period (typically 168 hours) during which all quakes or volcanic eruptions are considered a single event. For instance, if an earthquake and four aftershocks occur within a seven-day period, all five will be considered a single earthquake. Your limit and deductible will apply to all damage caused by all quakes that take place within the 168 hour period.
  • Policy Limit or Sublimit? If earthquake coverage is added to your property policy as an endorsement, it may be subject to a sublimit (reduced limit) rather than the limits that apply to other perils. Read the limits section to determine whether a sublimit applies.
  • Deductible Earthquake coverage is subject to a deductible that applies on a percentage basis. Your deductible options may range from 2 to 25% depending on your location and the nature of your building. The deductible may be a percentage of either the limit or the value of the damaged property. A separate deductible usually applies to each earthquake (or eruption).
  • Masonry Veneer Some policies exclude damage to exterior masonry veneer (except stucco) on wood frame walls unless the policy specifically states that veneer is covered. Veneer may be covered if it exists on a small portion of the exterior wall.
  • Cost Premiums for earthquake coverage vary widely depending on a variety of factors. These include the location of your property and its proximity to active faults; the property’s age and type of construction; the number of stories; and seismic improvements you have made.

Risk Management

Whether or not you decide to buy earthquake insurance, you should evaluate your earthquake risks. Depending on the results of your assessment, you may need a risk mitigation plan. Numerous resources are available online to help you through this process. As a starting point, check out the “QuakeSmart Tool Kit” provided by FEMA and “Earthquake Hazards 101” from the USGS.