JoelR (California)
Posts: 1
Posts: 1
Posted:
has any one any experience in using "loss assesment" coverage as an alternative to expensive earthquake coverage in So. Calif.?
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earthquake insurance alternatives
Started by JoelR • 2 replies • 1580 views
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JM2 (Oregon)
Posts: 439
Posts: 439
Posted:
Hi Joel:
A short answer to your question - no I have not.
A long suggestion:
Your community is insured against earthquakes - it's just that the owners are self-insuring if they don't have a policy; that means, if an earthquake happens that damages/destroys the community and they don't have a policy, they cover the cost of reconstruction themselves. That's usually expensive, because the policies sold that cover other types of damage (such as fire) don't cover earthquakes.
The question then becomes, would they like to enter into a contract whereby a company assumes part or all of the risk in exchange for some of their money? And then the Board has to ask, if I'm entrusted with an office to act as a fiduciary, what is my responsibility to the community?
I would be hesitant to advise a community to not have earthquake coverage if there is a reasonable chance that a strong earthquake would damage or destroy their community.
J. Patrick Moore, CMCA (Oregon).
A short answer to your question - no I have not.
A long suggestion:
Your community is insured against earthquakes - it's just that the owners are self-insuring if they don't have a policy; that means, if an earthquake happens that damages/destroys the community and they don't have a policy, they cover the cost of reconstruction themselves. That's usually expensive, because the policies sold that cover other types of damage (such as fire) don't cover earthquakes.
The question then becomes, would they like to enter into a contract whereby a company assumes part or all of the risk in exchange for some of their money? And then the Board has to ask, if I'm entrusted with an office to act as a fiduciary, what is my responsibility to the community?
I would be hesitant to advise a community to not have earthquake coverage if there is a reasonable chance that a strong earthquake would damage or destroy their community.
J. Patrick Moore, CMCA (Oregon).
JosephW (Michigan)
Posts: 882
Posts: 882
Posted:
One other thing you may need to look at - most of the D&O Insurers are now excluding coverage for the board if they are sued for not having flood or earthquake coverage. There may be problems with some of your other insurance coverages if you "fail to adequately insure". I believe that most "loss assessment" coverages kick in when you have a shortfall in insurance coverage and are assessed the difference. You might want to check to see if they will still cover if no association coverage is in place in the first place.
Joe
Joe
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