[Go Cubs Go]

I live in the bay area. Not in a terribly high risk area, but I know the whole area is at risk so when I purchased my condo 2 years ago I also added EQ insurance to my policy.

My question is does it make sense to continue the policy? I am paying about $436 a year for the EQ insurance (my home owner's alone is only $331). Also, due to the falling house prices, my home is now worth significantly less than I paid for it -- in fact it is probably worth about what I currently owe on it. My thought is that since my equity is currently at or close to zero, does it pay to keep the insurance?

Down the road when values increase (hopefully) and I'm no longer without equity, I could also add the policy back on.

Any thoughts?

[gennsss]

If you live in the Bay Area you ARE in a higher risk area for earthquakes.

It is very hard to get earth quake insurance in CA.

In the event of a quake that causes damage to your unit, insurance kicks in after the deductible. You could raise the deductible that would lower your premium if cost is an issue.

If in the event a quake damages your unit, and you have no insurance, you are still liable for paying on the loan and you won't be able to try and sell the unit damaged. Generally you can't sell property in CA and most states that are deemed "structurally unsafe" or in need of material repair such as walls, improper plumbing, etc.

I would keep in the insurance. Shop around for quotes too.

Also note: If in the event a quake happened and a (water) pipe breaks and floods your unit, even if the flood was cased by another unit, that would not come under earthquake insurance, that would come under flood insurance which is a separate policy. Keep that in mind too.

Good Luck!

[Jeromy W]

you ARE at risk, keep the coverage. i understand about values of homes going down for resale, but for replacement its going up. what you owe and what the appraised value is are completely different from replacement value. if you drop coverage and have a total loss, can you pay off your home? if you still owe on the home, your mortgage will require you to carry coverage anyway. if you don't they will force place coverage and add the cost to your loan. their coverage is usually twice as much as your policy. so its going to end up costing you MORE if you drop your policy.

[pegasus777777]

Well, it's about YOU balancing the risk, and your personal financial situation. Would you be devastated if you lost everything in an earthquake, and didn't get any insurance money? Or would that be not one of the top ten worries on your mind?

And how much is that $436 hurting you?

If it's not a big deal, that $436, and it's giving you peace of mind, keep it. If you're eating mac & cheese to buy earthquake coverage, give it up.

[Lan!! O_o]

The chances of a major earthquake happening this year, or next, may be small, but the risks to your financial future is huge. Should your condo be badly damaged, its value will go down. You already don?t have enough equity to pay for repairs, and you won?t be able to live in it or sell it without them. Sure, you could walk away from it, buy why risk your credit?