available through the CEA is $100,000. If the association does not have an earthquake insurance policy in place, this maximum limit is likely not enough to cover the full exposure to loss per owner. Find the certificate of insurance for your community, showing the total property or building insurance limit. Now, divide by the number of units in the community. That’s the approximate exposure per owner in a worst-case scenario.
OPTION 2
A Purchase by the Association Because the association on the whole owns all of the common property, the only way for an individual owner to have first dollar protection for earthquake damage to structure is for the association to make the purchase. These policies include a deductible. Therefore, in the event of a loss, the shared repair expense is the deductible on the policy, rather than the total property exposure. With this purchase, the maximum loss assessment per owner is reduced. Usually, it is reduced to an amount for which an owner can purchase earthquake loss assessment insurance to cover the full exposure.
OPTION 3
A Program Called Motus There is a new player in the earthquake insurance market. The Motus program is an opt-in process. Unlike the CEA, earthquake loss assessment limits are provided to the full exposure per member. This is particularly attractive when the HOA does
www.caioc.org 11
not have an earthquake insurance policy. Available coverage also includes interior finishes and loss of use. The cost to the HOA is minimal, just a small program administration fee. Then, each owner makes their own purchase, with limit options that take into consideration the owner’s individual risk tolerance. The catch, however, is typically that, when compared to the purchase by the association and a supplemental CEA purchase by the owner, the total expense to the owner is higher with the Motus program. In general, the Motus program is very attractive to owners in single family home communities, because their exposure to earthquake loss assessment is related to common area property like fences, pools, a clubhouse, etc. That is, property that is not residential structure, and assessments to which the CEA loss assessment insurance does not apply.
Earthquake insurance can be a confusing concept. But each purchase delivers its own peace of mind for those concerned about shake, rattle, and roll.
—Michael Berg is the owner of Berg Insurance Agency. He can be reached at
michael@berginsurance.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36
