Earthquake Insurance for income producing properties

[Bjorn Ahlblad]

I am a buy and hold investor here in the PNW. I just got quotes for Earthquake Insurance to cover my apartment building in Aberdeen and duplexes in Tumwater. Expensive, but without the income from these assets I'd have to go work at Walmart!

That has me wondering what others are doing to cover their income producing properties.

Can we get a discussion going; what are your thoughts and plans regarding Earthquake Insurance.

[Hayden Haucke]

I work in the insurance industry and can confirm that many property owners of all shapes and sizes decide to “self insure” earthquake. Right or wrong, I do think it’s something property owners should consider and see if they can make the added premium work from a cash flow standpoint.

The reason that the premiums are so high is that it’s the biggest threat to destroy the property and your investment. I have some clients that think that they could sell the land and cover their investment if the property were to be destroyed in an earthquake, however I have a lot of reservations about them being able to execute this as if their property is destroyed then chances are all properties in their neighborhood would be destroyed and the value of the land would be negatively affected as a result.

If you can make the added premium work from a cash flow standpoint and fund the deductible, but couldn’t handle the alternative which is a large uninsured loss, then I think purchasing the coverage would be worth it.

Just my two cents.