Do I need earthquake insurance for a condo or townhouse?

by Alessandra Imanabadi

By Alessandra Imanabadi · Nationwide Fine Homes

Begin with what you own, what the association insures and what could be assessed to you after a loss.

“The HOA has insurance” is not enough information. Neither is assuming that a townhouse and a condominium have identical responsibilities because the buildings look similar.

Read the coverage alongside the governing documents

Ask whether the master policy includes earthquake coverage, what deductible applies and how losses or repair expenses could be allocated among owners. Have an insurance professional explain the coverage available to you personally, including any loss-assessment coverage and its limits.

A master policy can exist while still leaving a substantial amount to be funded. If earthquake coverage is absent, the association and owners may face significant repair decisions after a damaging event.

Understand the deductible in dollars

For a simple illustration, a 15% deductible applied to a $500,000 coverage limit is $75,000. Actual policies can apply different deductibles to different coverage sections, so do not assume that one calculation describes your entire claim.

Understand personal property, loss of use and association assessments separately. The cheapest premium does not explain what would happen if the building could not be occupied.

Your agent should help obtain the documents; the insurance professional should explain how the policies respond.

I would be pleased to help organize those questions as part of understanding a property. You can consider the ownership responsibilities before deciding whether that home—and my approach to preparation—fits you.