Earthquake insurance in California

Simple. We don't have earthquake insurance. Not many people/HOAs do.

My goodness Tim, you are suggesting that a 20 unit association maintain a $1 million dollar reserve fund. We are a long way from that. If we assessed an extra $100 a month to toward that goal I figure it would take about 40 years.

I am not sure what other associations do in our area. This question is one of the ways I am trying to find out ;).

I used to think it was a nice benefit to have earthquake insurance covered by our association. But I'm seeing it differently these days. It is tripling the price of our insurance but with such a high deductable it is unlikely that we would be able to use it in the case that the whole complex was destroyed.

Unfortunately our CC&Rs say the dues are to be used for purchasing it: Section 4 (b)

The CC&Rs were written back in 1978 and I've been told that earthquake insurance was relatively inexpensive. Now it is 2 to 3 times the cost of the rest of the insurance.

Section 4. The assessments levied by the Association shall be used exclusively to promote the recreation, health, safety and welfare of the residents in the Properties and for the improvement and maintenance of the Common Area, and the maintenance of the Properties as hereinafter provided.

Without limiting the generality of the foregoing paragraph, there shall be included and provided for in the annual assessments all amount to cover reasonably the following expenditures by the Association:

(a) Necessary utility services for the Common Area, and the water charges by the Water Department of the City of [XXXXXXXX].

(b) A policy or policies of fire insurance, with extended coverage endorsement, and earthquake insurance for the structural improvements and equipment and other personal property of the Association on the Common Area, and all structures and other improvements on each Lot;

(c) A policy or policies insuring the Association and its Board of Directors and Officers, and the Owners and their invitees and tenants, incident to the ownersihp and/or use of the Common Area and the performance of the duties of the Association;

(d) A policy or policies of workers’ compensation and/or employer’s liablity insurance as required by applicable laws;

(e) Payments to employees and contractors for labor, materials and supplies incident to the maintenance of and repair and replacemnet of the improvements on the Common Areas and the performance of the duties of the Association to the Owners and the conduct of the affairs of the Association;

(f) Such fidelity bond or bonds as may be required by the Board of Directors of the Association;

(g) Painting of the exterior walls and other exposed areas of all structures on each Lot, and the exclusive right and duty to do and perform the same is hereby reserved to the Association;

(h) Repair and replacement of the roofs of all structures on each Lot, and the exclusive right and duty to do and perform the same is hereby reserved to the Association;

(i) Maintenance of all landscaping of and fire protection areas in the Common Area, and the exclusive right and duty to do and perform the same is hereby reserved to the Association; and

(j) Taxes and assessments including, without limitation, taxes and assessments which are, or could become, a lien on the Common Area or any portion thereof.

We are a 8 unit complex in the San Fernando Valley section of California, say Northridge, and we do not have EQ covereage. We were quoted 15K to have a policy with a 20% deductible. Our HOA raises 32K a year in HOA fees so adding 15K or $150 or so additional a month HOA dues is never going to pass. On top of that each unit is underwater so bad that they would walk away if there was an EQ that destroyed our property.

Pricing needs to get more reasonable: Yea right!