Earthquakes in California

[Frank Real]

Dear Sir/Madam,

I am interested in investing in rental properties in California but am concerned about earthquakes that were said to happen here soon. What do you do to prevent an earthquake from causing major financial problem to your rental property and even your own life?

Thanks

Frank

[Account Closed]

I don't know the coverage exclusions but the deductible alone is enough to make you pause. The coverage limit has to be the same as your Homeowners insurance, which in turn is determined by rebuild value and mandated by your lender. Then EQ insurance has 15% deductible on that; On expensive Bay Area home, that deductible can be as much as 150K on a $1M home. Thats enough for a lot of repairs! The best bet is to get a good EQ retrofit on your foundation. For a few years worth of insurance premiums you get better protection in case of a quake. The key is to have the right shear walls to absorb the shaking and make sure the house is bolted well to the foundation. That will hopefully protect the structure. There are some interesting pics online showing identical homes next to each other one with retrofit and one without. The differences are dramatic after the Northridge quake.