I’m often asked about earthquake insurance—do most homeowners in San Francisco have it? Do the majority of condo buildings have an earthquake policy?
Only about 12-15% of California homeowners have earthquake insurance, and I believe that ratio drops further in The Bay Area and San Francisco. The reason behind this is that earthquake insurance is very expensive. In a condo building, it doubles your homeowners association dues (HOAs). Additionally, most policies come with a 10-15% deductible. This means the damage to the building would have to be pretty severe in order for you to use your coverage.
I do believe, however, that if you have substantial equity in your building, it is a wise idea to consider purchasing earthquake insurance.
What do you look for when evaluating how well a property will hold up against an earthquake? Take note of its overall construction material (i.e., wood-framed buildings tend to hold up better against ground shaking). Review the hazard report rating (i.e., is the building located in a Zone A–the most susceptible to an earthquake, or a Zone D/E, which would have a better chance in an earthquake). And consult a general contractor about how seismically sound the property may be (i.e., foundation bolted, etc). If a property was built before 1906 (year of the big earthquake) and it’s still standing, that’s a good indication that it’s been constructed well.
I have sold many condos in San Francisco over the past decade, and maybe one or two condo buildings I’ve sold actually had earthquake insurance. Ironically, the buildings with earthquake insurance tend to be harder sells, because the HOA dues are prohibitively expensive for buyers. If you’re buying within a building that doesn’t have earthquake insurance, the HOA would have to decide whether to obtain that coverage. It’s not available on individual units.
If you’re interested in more information, contact your favorite insurance rep and inquire about the specifics for earthquake coverage.