Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

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Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  Admin on Wed Apr 14, 2010 11:41 pm

Hi folks,

As some of you already know. Villagio does not have earthquake insurance. However, the board is reconsidering. The issue is cost.

We have invited a representative from Farmer's Insurance to explain the options and costs to all residents. The board will want to gather feedback from homeowners before we make a decision. Actually, based on what we already know, we may need residents to buy supplemental earthquake insurance, so it's in everyones interest to attend.

I will post additional details in the next few days but the date is set. May 12th, 6pm by the pool.

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Town Hall Meeting

Post  jeanmarlowe on Thu Apr 15, 2010 10:44 am

Can we have speaker so we can hear the speaker?

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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  Admin on Thu Apr 15, 2010 6:02 pm

Hmm...I don't have one. Peachtree will not be in attendance, so we need to fend for ourselves. I'll ask around but if anyone reading this happens to have one and wouldn't mind bringing it. It would be greatly appreciated.
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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  Admin on Tue Apr 20, 2010 2:51 pm

Peachtree is sending out this notice to all homeowners.

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Dear homeowners,

As you may know Villagio, as an HOA, currently does not have earthquake insurance. Many homeowner's have recently inquired and as part of the action plan from the online survey we are evaluating purchasing an earthquake policy. Since this will be a substantial incurred cost, we want to gather the opinions of homeowners and potentially put the decision to a vote.

As part of this effort we are going to hold a town hall meeting by the pool on May 12th at 6pm. Our Farmers agent Nancy Duperroir will be there to walk us through the options and answer any question homeowners may have.

Here’s a summary of what you need to know about the policies and potential costs.

The first is a policy that covers the HOA (and is paid for by HOA dues), it’s called the Earthquake Structure of Complex policy. Here are the key details.

- The cost is $52,937 per year - Avg cost per homeowner would be ~$194/yr or $16/month (this would likely be prorated by square footage like our current dues
- It has a maximum payout of $5M
- There is a deductible of 10% of the replacement value per building
- Our estimated cost to rebuild all buildings is $56M for all 13 buildings ($56M/13=$4.3Mx10%=$430K deductible (approximate)

The second policy would need to be purchased by the individual homeowner. It’s called the Loss Assessment policy
- There are 2 levels. $75K or $50K
- The $75K policy has a $11,250 deductible; costs $800 (with all options personal property, loss of use, etc) ~$67/month
- The $50K policy has a $$7,500 deductible; costs $650 (with all options) ~$54/month
- This policy only pays out if the HOA imposes a assessment on homeowners in order to rebuild in case of an earthquake.

Here are two examples of how these policies would come into play.

Scenario #1 – A major earthquake that damages all buildings. The assumption is that all the buildings need to be rebuilt.
The hoa gets a quote for a total rebuild of $56M.
The Earthquake Structure of Complex policy kicks in. It pays the full amount of $5M. We are still short of $51M dollars.
The HOA BOD would then create an assessment to pay for the reminder amount to cover the costs of the rebuild. $51M divided by 273 units equals $187k.
If you have a Loss Assessment Policy it will cover up to $75K or $50K after the deductibles are covered. The remainder will need to be secured from personal savings, or special government loans.


Scenario #2 – A moderate earthquake that does some damage to all buildings.
The assumption is that each building requires repairs and the total reconstruction totals $9M.
The HOA Earthquake Structure of Complex policy pays the first $5M. The additional $4M is split across all 273 units. Which equals $15K in assessments. Since you have a deductible of $7,500 or $11,250 the policy will only cover a portion of the rebuild costs.

We have no way of predicting what the actual costs will be since that is completely dependent on the size and scope of the earthquake.

Please bring your questions to the meeting so we may discuss this together.

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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  nunu on Thu Apr 22, 2010 10:18 pm

Hi Tom,

So glad to know that HOA started discussion again about earthquake insurance. From the recent listing on redfin, I noticed Galleria HOA has earthquake insurance coverage (not sure if it's true, pls refer to the listing @http://www.redfin.com/CA/San-Jose/419-Galleria-Dr-95134/unit-5/home/1185190). Is it possible to find out the details of their coverage for benchmarking purpose?

Thank you.
nunu @ building#470

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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  Admin on Wed Apr 28, 2010 9:04 pm

Speaking to our agent it seems that all of these community policies use the same underwriter regardless of who your agent is. So the terms are the same. The number of units, when the community was built, some other characteristics will have a bearing on the cost but the key terms will be the same.
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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

Post  Admin on Fri Apr 30, 2010 11:42 pm

Please set a reminder for yourselves to attend this town hall meeting.

MAY 12th 6pm (by the pool)

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Town Hall Meeting - Earthquake Insurance

Post  trebor on Sat May 01, 2010 7:15 am

Insurance in general can be a very controversial subject. The cost/benefit is not always apparent and my experience with various insurance policies is that you really don't know what coverage you truly have until the event happens. Earthquake insurance is very expensive and if I understand the scenarios cited in no case do we get anywhere near the current replacement value of our unit if the event happens. One question is how does FEMA play into this if we had an earthquake that resulted in our buildings needing to be replaced?

In Scenario #1 the deductible is $43OK per building. If there 273 units and 13 buildings that equates to 21 units per building so w/o a prorated schedule that is a deductible of $20,476/unit. If the policy pays only $5 million then the remaining $51 million equates to $186,000/unit un-prorated. My unit’s current fair market value is $550,000. How does $186,000 pay to replace a $550,000 unit. What is the current construction cost per square foot for a building? A single family home must be over $200/sq ft. So even if construction costs were a $100 sq ft my unit at approx 1700 sq ft that is $176,000. First point: $186,000 sounds low. Second point and most importantly is that even at $186,000 with the $20,476 deductible that is $206,476 that I would have to come up with to replace my unit. What if I don’t have $206,476 how does the building get built? What if any unit owner in the building does not have funds to even pay the deductible?

There other concerns such as is there an escalation clause to keep up with true replacement costs? How do our individual policies fit in with content coverage and how do we assure we are not paying for duplicate coverage? What living expenses are covered while the building is either inhabitable or being replaced?

I have cited just a few concerns and as a previous owner of several single family homes I have found earthquake insurance costs to be prohibitive and policies are not easily understood. I consider myself a realist and I look at what happened in the decision process on what color to paint our complex. This is a potential big can of worms. My opinion is that owners should be on their own to decide if they want earthquake coverage through their own insurance company.

I believe insurance coverage is very personal and the savings of a “group” policy compared to an “individual” policy may not be of any benefit unless each unit owner is getting the coverage that makes sense to them at a substantially reduced cost. Some people don’t believe in insurance, some want maximum coverage, some want minimum, some can’t afford coverage. A potential can of worms indeed.

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Re: Town Hall Meeting May 12th 6pm - The Topic is Earthquake Ins

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