Business & Tech
Earthquake Insurance: A Tale of Two Communities
As the challenge of finding insurance to cover the common areas in the many Alameda communities governed by homeowner associations grows, Bay Farm residents in two associations wrestle with cost vs. coverage.
For the owners of the townhouses in Bay Farm's Brittany Landing Bay (BLB), the issue of insuring the community's common spaces and exteriors came to a head after State Farm chose not to renew the Association's group policy in late 2009.
On August 16, the BLB condo owners voted 51-42 not to purchase a group earthquake insurance policy that would have raised the Homeowner Association dues by $97, bringing monthly dues to $531.
"It didn't make sense to put out another hundred dollars a month when I already have a CEA [Individual] policy," said BLB home owner Bart Van Housen, who voted against the policy.
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While individual homeowner insurance covers interiors, communities governed by homeowner associations, like the many on Bay Farm and in other parts of the Island, have traditionally purchased group coverage for shared spaces and exteriors.
In recent years major insurers have either stopped writing new policies or pulled out of the earthquake insurance business altogether.
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According to a June 2010 Liquefaction Assessment prepared at the request of the BLB home owners' association, BLB is considered to have "a high potential for liquefaction." When soil liquefies, homes are more likely to suffer structural damage from a quake.
Just across the lagoon, home owners in Brittany Landing Harbor (BLH) decided to pay more for a new master insurance policy when they too lost their StateFarm coverage in 2009. Their group insurance plan now costs each owner $129 a month. Monthly dues are now $521.
Is it worth the additional cost? "It is for me," says BLH home owner Mary Lavine. "I want that security. I know the composition of the ground we live on."
Homeowners in both communities are also concerned about the negative impact of higher monthly fees on the resale prices of their homes—they worry potential buyers might be driven off.
"HOA dues are scaring people away," says Van Housen, who also says that that if dues increase any more, he might leave. "
"The earthquake insurance—it's a gamble either way," he says. "But at this time, I'm just tapped out."
