What California Homeowners Should Know About Earthquake Insurance

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Earthquakes can have devastating effects. And considering the fact that there are fault lines throughout the Golden State, this west coast state is prone to earthquakes more than most other states in the US.

You already have homeowner’s insurance (or at least you should), but should you take out an extra policy to protect against damage caused by earthquakes? Before you do, be sure to consider everything about these types of policies.

Earthquake Insurance Isn’t Mandatory

Homeowner’s insurance is required if you plan to take out a mortgage on a home. Lenders want to make sure a home is insurable before they extend a loan. But not every homeowner necessarily needs earthquake insurance. Depending on where you live, earthquakes might be a rarity, while they may be more commonplace in other parts.

Only you can decide whether or not you should get earthquake insurance, as it’s not a mandatory type of coverage that homeowners are required to take out. That said, California is one of the states in the US that is prone to earthquakes – especially along fault lines – so it’s something that may be worth considering.

Coverage Required Depends on Several Components

The amount of earthquake insurance that you take out will depend on certain things, such as the value of your home, the cost to rebuild it, and the value of your personal possessions. Consider the value of everything that may be at risk when determining how much insurance to take out.

Coverage is Expensive

Insurance itself is not exactly cheap. But earthquake insurance, in particular, is quite expensive compared to standard policies. And the cost of coverage becomes even more expensive in earthquake-prone regions. You can expect to pay an average of $3.50 per $1,000 of coverage in California. So, for a home that’s worth $500,000, the annual premium would be $1,750.

Several Factors Influence Rates

The above figure is an average ballpark amount you can expect to pay. But the actual cost of your policy depends not only on the value of your home and the cost to rebuild it, but also the following:

  • ZIP code
  • Proximity to fault lines
  • Age of the home
  • Number of stories
  • Building materials used
  • Soil type

Deductibles Need to Be Paid First

Just like any other type of insurance policy, a deductible will need to be paid when you file a claim. The amount of your deductible will sometimes depend on what you decided on when you first took out your policy, if your insurance provider allows you to choose. For instance, you may have chosen a higher deductible amount in exchange for a lower annual premium. Or else, a lower deductible amount will mean a higher premium.

Otherwise, many insurance companies offer set deductibles based on the overall policy limit, usually somewhere in the range of 15%. That means that if you file a claim for a $300,000 policy, you would have to pay a deductible of $45,000.

Consider what your deductible is and the extent of the damage done to your home as a result of an earthquake before you decide to file a claim. If the damage done is minimal, it might not be worth paying the deductible and seeing your premiums increase as a result. On the other hand, extensive damage will likely be worth tapping into the policy you took out to protect your finances in the event of an earthquake.

Possessions Are Covered to a Set Amount

With earthquake coverage, your personal belongings are generally covered up to a set dollar figure. Let’s say your limit is $5,000, which would be fine if the damage done to your possessions doesn’t amount to any more than that.

But this can be a bit of an issue if expensive entertainment systems, electronics, and other high-ticket valuables that are valued much higher than $5,000 are broken. If you have a lot of valuable goods in your home, consider taking out more coverage for contents.

Exclusions May Exist

Not everything will necessarily be covered in an earthquake insurance policy. Certain things may be excluded, so you’d be well advised to find out what is and is not included in your policy when you take one out.

Examples of things that an earthquake policy may cover include:

  • Repairs to your home and any attached structures
  • Furniture
  • Clothing
  • Additional living expenses if your home is uninhabitable

Things that an earthquake policy probably won’t cover include:

  • Fences
  • Pools
  • Separate structures
  • Vehicles
  • Fine china and other delicates
  • Masonry
  • Sinkholes
  • Fires caused by an earthquake
  • Floods caused by an earthquake

Discounts Exist For Retrofitted Homes

If you’ve taken precautions to ward against damage caused by earthquakes, you may be eligible for a discount on your policy. For example, bolting down appliances, securing the home to the foundation, and bracing interior walls can all help to keep the structure standing despite an earthquake. Whatever you do to solidify your home’s structure, you can reap the rewards with a lower premium.

The Bottom Line

Earthquake insurance is by no means required. But considering the state in which you live, it might be a viable policy to think about. That said, the expenses need to be considered, as does the type of coverage that you’ll get. Be sure to speak with an insurance provider and ask plenty of questions about these types of policies before you take one out.

7 Advantages of Living in a 55+ Community

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When you reach a certain age, your needs and tastes may be different than what they may have been in your younger years, and that includes your housing arrangement.

Maybe your current home is getting to be too much for you to maintain, or perhaps climbing up and down the stairs is becoming tiresome and even difficult. Or maybe you’re ready to be surrounded by peers within the same age group and are looking for something to keep you engaged and active when you retire.

If that’s the case, then a 55+ community might be the right move to make at this stage in your life.

What is a 55+ Community?

As the name suggests, a 55+ community is geared towards those who are 55 years of age and older. They’re not designed for young families with children or even middle-aged professionals. Instead, they’re designed with people who are nearing or in their retirement years.

This particular age demographic has many different needs and tastes that those who are much younger, and as such, they’re designed to accommodate these specific requirements.

Here are some of the benefits of 55+ communities.

1. Properties Are Designed Specifically For Seniors

The home that you may have bought when you were younger may have suited you well back then, but perhaps it doesn’t work as well for you today. Rather than making structural changes to your current home to suit your needs or your changing mobility issues, moving into a place that’s already structured to make mobility much easier might be a better idea. 

2. Residents Are in the Same Age Demographic

One of the biggest advantages of living in a 55+ active community is that you’ll be surrounded by others in the same age group. If there are no friends or family nearby, seniors can end up becoming increasingly lonely in a neighborhood filled with younger residents or children.

A 55+ community solves this issue by attracting those who are in the same age demographic and who are looking for the same types of amenities and activities.

3. Quiet Environment

As the name suggests, no one under the age of 55 is permitted to live on the premises. While family can visit, no children will be running around on a regular basis, which makes these communities quieter places to live. If you’re looking for a tranquil home and community, these active senior living communities are a great option.

4. Security

Active 55+ communities typically come with on-site security that residents can take advantage of. If you’re on your own, living in a community that offers 24/7 security features can not only make you feel more secure but can help your family ease their worries about you living on your own. If security is an important feature for you, then a 55+ community may be an ideal choice for you.

5. Plenty of Amenities and Events

Active living communities typically implement a number of amenities and events that are designed to keep residents active, engaged, and entertained. These communities usually offer onsite opportunities to socialize, stay physically fit, and even volunteer.

You can expect to have amenities such as swimming pools, fitness centers, yoga classes, social events and gatherings, and even organized outings. Such amenities and events can help fill your days with enjoyment and can help you stay active and engaged in your community.

6. Less Maintenance to Worry About

No one really enjoys the regular ongoing maintenance that usually accompanies homeownership. But in a 55+ community, the majority of maintenance is taken care of. That means less work and time spent maintaining your property and more time enjoying the company and amenities that your new community has to offer.

7. Medical Facilities in Close Proximity

As you age, having quick and easy access to medical assistance becomes an increasingly important concern. The great thing about 55+ communities is that they’re typically constructed within close proximity to healthcare centers. While there might not be any physicians or nurses on site, you can rest easy knowing that medical help is usually just a quick commute away.

Should You Buy Into a 55+ Community?

There are definitely plenty of perks of buying into a 55+ community, but it may not necessarily be right for everyone. It’s important to note that while these communities are designed for those who are in their later stages of life, they don’t provide onsite medical care or support that assisted living facilities do. Instead, these are active lifestyle communities.

Those who are 55 years of age or over and are relatively healthy would benefit best from communities like these. If onsite healthcare services are not required on a daily basis, this type of investment might be better suited for them as opposed to someone who may require more hands-on medical care and attention.

The Bottom Line

If you’re approaching your senior years and have a penchant for staying active and being surrounded by like-minded peers, then perhaps a move to a 55+ community may be the right one for to you make at some point. Just be sure to ask plenty of questions and find out everything there is to know about a particular community, including amenities and rules. With a trusted real estate agent by your side, you’ll have all the support and guidance you need to choose the community that’s best suited for you.