Earthquake Insurance in Bay Area

[Ratesh D.]

Hi All,

Are you taking out earthquake insurance on your investments in the Bay Area whether for SFH or Multi? I know a lot of folks who see this as a waste of money or a unlikely event, but give the huge financial investment required to own property in this area how do you think about your downside protection for an event that could set you back years? Is it better to invest in new properties that have a better chance of withstanding a quake?

Thanks. 

[Jonathan Pflueger]

@Ratesh D.

This is a great question, one that I have asked myself many times. 10-15% as a deductible of the insured amount is a large chunk of change to lose and for most places in the Bay Area a complete deal killer. Being a buy and hold investor this makes me a little nervous as I am sure to experience some sort of quake over the life of my investments. 

One way to help hedge your bets is to acquire deals built before 1989 - aka the last big quake- and hope the fact that they are still standing is proof they are "earthquake proof." Not a great strategy but better than nothing.