PDX Metro should I get earthquake insurance coverage?

Question

I think the answer is a resounding 'yes' but wanted to get your opinion. I have a couple of investment properties in Portland OR metro area. As the region is bracing for a big one, should I be getting earthquake coverage for these investment properties? Currently I do not have this coverage and I am planning to get it. Any insurance companies you can recommend with cheaper rate?

Thanks

Mathew Wray · Answer

Hi Shaimon,

I have earthquake insurance on one of my properties that is older (and my most valuable one) but not on any of the others that are newer. I suppose you could call it a calculated risk in not covering newer properties. It can’t hurt to have and it’s not super spendy-off the top of my head, it’s less than $1,000/year.

Realistically, I’d say your odds of the Portland city council or the State making a regulation that destroys the value of your property is more likely than an earthquake destroying your property, at least in the near term. Anyone know of “city council” insurance? :)

Account Closed · Answer

OMG Mathew that's my favorite post this month!  After Chloe Eudaly publicly slapped my wrist at a council meeting in February for referring to her as "Eudaly" instead of calling her "COMMISSIONER Eudaly," I have faith in neither her diplomacy nor her judgment.

ANYWAY, regarding earthquake insurance, I looked into it and decided against it.  First, State Farm wouldn't even insure my duplex at all for earthquakes since it was built before 1996.  Second, even if they would, the cost/benefit analysis didn't add up because earthquake insurance is pretty spendy (compared to just regular insurance).

Instead, I bolted my 1958 building to its foundation (cost $3k), which would guard against the most expensive type of damage (house falling off foundation).

Also, there's been a lot of hype about earthquakes in the Cascadia subduction zone lately.  I'm a Portland NET (neighborhood emergency team) trained to respond in a disaster situation, and even with that knowledge and bias, I still believe that the chances of an earthquake happening while you own your properties is low.  If it does happen, it's probably going to be incredibly strong, and would likely destroy anything not bolted down, and even some houses that are bolted down.

The way I look at it is, if the insurance companies will only insure houses that are earthquake-proofed (because presumably that minimizes expense/damage), then why not earthquake-proof the houses and not pay the extra premiums?  And it wouldn't surprise me if there's some rider in earthquake policies that excludes this or that, including if the house falls off the foundation.  Still, might be worth looking into, as long as you read all the fine print, conditions, exceptions, and loss of income options.

Oh, last thing: you might be in a liquefaction zone.  (https://www.portlandoregon.gov/pbem/58572)  In that case, bolting might not do much to prevent total destruction.  I don't know how that relates to insurance--maybe it's a case for buying it, maybe not--but it's something to think about.