A recent buyer asked...Do I need flood insurance?
And should I have earthquake insurance?
The answer is IT DEPENDS.
With regard to earthquake insurance, it is optional, and not required by a lender as a condition of a loan. I asked two well respected mortgage officers I know. That's true at least right now. Requirements could change, I suppose, as they seem to every day.
Having earthquake insurance may be a good idea, especially if the home is found to be located in an earthquake fault zone per the Natural Hazards Report (e.g., First American, Disclosure Source, Property ID) and the maps compiled by the California State Geologist.
As we all know here in CA, earthquakes are pretty common, but generally low level, and many areas can experience them.
Check out the California earthquake map for the last week.
Being in an earthquake fault zone is no guarantee of an earthquake significant enough to cause damage, but it's more likely. But not being in such a zone is no guarantee you won't have one either. Or that there won't be one at a level substantial enough to cause damage.
It all boils down to choice, and whether you want to spend the additional money (earthquake insurance is not inexpensive). And probably being prudent in some areas.
Flood insurance is another matter. Flood insurance may be required if the lender determines the home is located in a flood zone. This will likely be noted in the Natural Hazard Report as well. (photo courtesy of U.S. Geological Survey on Flickr)
What is determined to be a flood zone sometimes is hard to understand. I remember buying our home in Bolton, MA, on a hill at least 30 feet ABOVE the level of the stream and wetlands across the street. Yep, flood zone.
The questions about having flood and earthquake insurance are good ones and often come up with buyers.
Thoughts on these matters or experiences you'd like to share?