• What are the drawbacks of not having earthquake insurance?

Most San Franciscans do not purchase earthquake insurance, hopefully reasoning that with proper retrofits or new construction standards, their homes will never sustain enough damage to justify the expense of a policy — i.e., the damage will not amount to more than the extraordinary deductible. In addition, the law requires standard homeowner policies to cover fire damage, even if the fire results from a quake. The point is, with the high cost of homes in the City, many homeowners simply can't afford additional insurance.

The major drawback of not having insurance is that your investment — probably the single greatest one of your life — stands unprotected if a high magnitude quake wreaks havoc on your home. Damage could be more than the actual equity you have in the property, resulting in bankruptcy and foreclosure. Also consider that if you live in a condominium and the Homeowner's Association (HOA) does not have earthquake insurance, or has not set aside enough funds for the massive deductible, the HOA could assess you and the other owners of the building for the necessary deductible or repair costs. Then, if you do not have the money, the HOA could have the right to foreclose on your unit.

In addition, regular condo insurance for the contents of your unit does not usually cover damage from quakes, either. But you might be able to get an extended policy or additional separate coverage. First, see if your HOA holds an earthquake insurance policy for the building and if that policy covers the contents of individual units. Most likely it does not, but make sure to do your homework. If it does, get details on the extent of the coverage. Likewise, if you own a single-family home and have earthquake insurance, look into the extent of coverage for the contents of your home. In either case, if coverage is limited, you may want to purchase additional insurance for your most valuable items.