Is Forgoing Earthquake Insurance Worth the Gamble?

By Arthur Murray

Earthquake insurance suffers from bad PR. Homeowners either don’t know they need it, think it’s too expensive, complain about its deductible or debate its overall benefits. But going without coverage is a gamble, and the odds can get progressively worse depending on where you live.

Homeowners who don’t purchase earthquake coverage could find their finances swallowed whole should a temblor (as quakes are also known) strike. That’s a pretty big risk.

Why you need it

Let’s get one thing straight. Standard home insurance policies exclude earthquakes from the perils they cover. That means if you don’t have an earthquake endorsement or a separate earthquake policy, you won’t get any help from your insurance provider for damage caused by an earthquake.

Here are a few more facts you should know about earthquakes, your home and your home insurance.

  • Not just California. Earthquakes don’t happen only in the Golden State. According to the Insurance Information Institute and the U.S. Geological Survey, 42 states are at risk of earthquakes. The most damaging quake in U.S. history occurred in February 1812 in New Madrid, MO, with $112 billion in losses (adjusted for inflation), according to estimates by AIR Worldwide Corp. The third most damaging occurred in Charleston, SC.
  • A lot of shaking. About 20,000 temblors, most very small, occur in the U.S. each year.
  • Here’s the damage. Insured losses from earthquakes in 2014 were about $313 million, according to Swiss Re. That’s nearly 700 percent higher than the previous year.
  • You’re all a-loan. If you’re counting on the federal government to help after an earthquake, you’re likely to be disappointed. Most federal disaster aid comes in the form of loans, and must be repaid.

What it costs

The cost of earthquake insurance varies widely according to the risk factor where you live and the age and type of your home. Older homes generally are considered more vulnerable to damage, and brick homes typically cost more to insure than wood ones.

So how much will you pay for coverage? According to the California Earthquake Authority, premiums average nearly $800 a year. The cost is much less in states where the threat is lower. In Oklahoma, for example, coverage can range from $45 to $300 a year, according to the Oklahoma Agents Alliance.

Earthquake deductibles

Here’s where many homeowners find an issue with earthquake insurance. A deductible is the amount a policyholder agrees to pay toward a claim, with the insurance provider picking up the rest, up to the limits of the policy.

Under standard home insurance, the deductible typically is a dollar amount — say $1,000. Say a tree fell on a homeowner’s roof, causing $4,000 worth of damage. The homeowner would pay $1,000, with the provider picking up the rest.

But earthquake insurance deductibles usually are expressed as percentages of the total value of a home. That percentage can range between 2 percent and 20 percent, depending on the amount of risk and other factors.

So a homeowner with a $200,000 house and a 20-percent deductible who suffers $50,000 worth of damage would have to pay the first $40,000 toward a claim before the earthquake coverage would take effect. If the damage is less than $40,000, the provider wouldn’t pay the policyholder anything.

Those are the numbers that scare many homeowners away from an earthquake policy.

Overall benefits

In many ways, earthquake coverage is like flood insurance. It’s a nuisance — and a costly one at that — until you need it. Even in the scenario above, wouldn’t you rather borrow $40,000 for repairs than have to foot the bill for $200,000? (Remember, you’ll still be liable for paying your mortgage even if the home is destroyed.)

One other benefit: Standard earthquake coverage also protects your home’s contents: your furniture, electronics, clothing and other possessions (up to your policy limits).

The decision on coverage

Only about 10 percent of Californians purchase earthquake coverage, according to the state’s insurance department. Nationally, just 7 percent of homeowners buy it. The number is even smaller in the Northeast, where only 2 percent of homeowners have earthquake protection.

While misery loves company, few uninsured victims of an earthquake would find real solace in the fact that their neighbors are ruined, too. Some folks will continue to gamble, figuring they can beat the odds of damage. That may be — but think of the consequences for those who end up on the wrong side of that bet.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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4 Reasons to Buy a Home This Spring

The home buying season is about to get under way, and it’s expected to be a busy one. Here are four factors that are likely to influence buyers.

Low mortgage rates

Everyone knows that the low-rate party is coming to end. Zillow is forecasting that mortgage rates – currently around 4 percent for the 30-year fixed – will rise to 5 percent by the end of 2015.

Granted, a 1-percent rise may not sound like much, but it’s a great motivator to get in and buy now. After all, a 1-percent increase in rates reduces affordability by a whopping 11 percent.

Confidence

Zillow’s Housing Confidence Index (ZHCI), which is designed to offer insights into homeowners’ and renters’ intentions and attitudes concerning the housing market, is a forward-looking gauge of housing market health. And things are looking up.

Confidence in the housing market is higher this year than it was last year — among homeowners as well as renters, many of whom are now rethinking their attitudes toward home ownership and are ultimately becoming more interested in buying.

High rents

Rental affordability is as bad as it’s ever been across the U.S., in part because there are not enough new, affordable units to meet demand. Renters can expect to spend 30.1 percent of their income on rent, while home buyers can expect to spend about 15.3 percent of their monthly income on a mortgage payment.

Those numbers alone are driving renters who can save for a down payment to pursue homeownership. In fact, data from Zillow shows that 5.2 million renters want to buy in the next year. That’s up from 4.2 million renters from the same time last year — almost a 25-percent boost.

Loan availability

Getting a mortgage is significantly easier than it was a year ago, and the markets are rapidly approaching pre-crisis credit conditions.

What this means to borrowers: Those who last year may have only been eligible for an FHA loan are now being offered conventional loans with private mortgage insurance. As lenders open their doors wider, borrowers have more options, with competitive terms and rates.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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How to Revitalize Home Exteriors After Winter

Spring is undoubtedly a beautiful time of year — daylong sunshine, blooming flowers and green grass are more than welcome after gray winter skies. But, there’s no denying how much work goes into cleaning up the yard after the snow melts. Just as you would on the inside of the home, it’s important to administer some spring cleaning techniques outdoors.

Here are a few ideas to freshen home exteriors after a long winter.

Wash the exterior thoroughly

Don’t waste time scrubbing the entirety of your house by hand. A pressure washer eliminates the need for elbow grease and even has a compartment for specialized detergents, mimicking the same soapy scrubbing without the muscle aches. Be careful, though, as pressure washers can be dangerous if used incorrectly.

“I actually have used a pressure washer,” says Heather Hahn of Chiffon Souffle. “It was when I had to assist my dad back home in washing off our front patio to our lake cottages. When I was using it, I felt like I was going to be knocked over. You need to have a strong, sturdy stance when you’re using one of those.”

Although primarily an autumn task, check the gutters to make sure no debris clogged passageways over the winter. Wash all windows and screens thoroughly. For a natural cleanser, combine 50 percent water with 50 percent vinegar and wipe down grimy glass with crumpled newspapers over paper towels.

Spruce up the garden and lawn

If you live on the East Coast, you likely experienced heavy amounts of snowfall this past winter. When temperatures warm, it’s common to see hats, gloves and garbage lying about the yard that disappeared under blankets of cold snow. Make sure to go around the yard and dispose (or wash) any out-of-place items before proceeding with lawn care.

Whether trying to attract house hunters or just sprucing up for your own enjoyment, an aesthetically-pleasing lawn requires more than trash removal. After snow melts, grass is usually soggy, flat and brown. First, try raking matted blades to bring them back to life. Then, sprinkle fertilizer for added nutrients. Check your sprinkler system to ensure it’s functioning efficiently so grass remains hydrated and green through July and August.

“It’s really important to get an early start on the lawn,” says Mike Collins of Wealthy Turtle. “I try to throw down some fertilizer and fresh seed as soon as the weather warms and then water it religiously until it takes root.”

For even healthier grass, consider calling an aeration service company. Aeration allows water and air to reach the roots of grass faster for a plush looking lawn.

Replace or refurbish lawn furniture

Forget fumbling with towels or suffering pesky mud stains to enjoy the outdoors. Instead, furnish your yard. It’s important to use furniture intended for outdoor settings. Wicker, wood, metal and resin are the most common materials used outside due to their durability. Patio furnishings are designed to weather the elements, but they may require intermittent upkeep.

If you’re purchasing new pieces, check out garage sales. Many homeowners downsizing or moving to an apartment without patio or yard space need to unload their outdoor furnishings, and buying second-hand is a great way to find quality at a low cost.

If you failed to winterize your patio furniture, no fear. You can implement a few different techniques to revamp your tarnished outdoor chairs and chaises, depending on the material.

For wrought-iron, apply a fresh coat of stain or paint. Don’t forget to use a rust-resistant primer. If rusting is widespread, you might want to sandblast and start fresh. Aluminum doesn’t rust, but regular washing and waxing will keep surfaces shining.

Wood furniture should always be protected with outdoor varnish to avoid drying and cracking. Faux wicker (made of vinyl) should be scrubbed regularly. Bamboo tends to split when left out for extended periods of time, so make sure to bring pieces inside during inclement weather or stow away at the end of the season. Plastic is easy to scratch while cleaning, but blemishes can be painted over with specialized super-bond paints.

Although it may not be warm enough to bask in the sun quite yet, get started now so you’re prepped for breezy, open-air living all summer long.

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UPDATE: Save $18.75M on Two Hearst Penthouses in New York

UPDATE: William Randolph Hearst’s former estate in the sky overlooking Central Park is still on the market, but for $4.75 million less than before — now just $22.75 million. A former Hearst penthouse overlooking the Hudson River listed a year ago at $38 million and is now down to $24 million.

ORIGINAL POST 11/25/2014: Before Gilded Age newspaper baron William Randolph Hearst built his famous San Simeon castle in California, he held court in two New York residences — both of which are currently on the market.

The Hearst penthouse at 91 Central Park West had reportedly been under contract by designer Giorgio Armani in October, but the deal has apparently fallen through. The 4-bedroom duplex is listed again for sale at $27.5 million by the Corcoran Group.

The home boasts “unrivaled views of the park and the iconic New York skyline.” Stained-glass windows, herringbone wood floors, large closets, built-ins, detailed moldings and a handcrafted Elizabethan-style wood-burning fireplace are just some of the features. According to the listing, the home “retains the grandeur and magnificent scale that is reminiscent of the early 20th century.”

Meanwhile, Hearst’s former quintuplex at 137 Riverside Drive is on the market for $31 million — after $7 million was cut from its original ask, according to Christie’s International, which holds the listing. Originally, Hearst leased the top three floors, but in 1913 he purchased the entire building for $950,000.

The five-floor residence is comprised of floors eight through twelve, and was at that time the largest and most opulent apartment in the city, which can be gleaned from the names of some of the grand parlors: the Greek Room, English Room and Julius Caesar Room. The 17-room residence offers outdoor spaces and is being called a chateau in the sky.

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David Fincher Reportedly Buys Tribeca House of Bricks

David FincherDavid Fincher, the film director and producer who can do no wrong, has landed in Tribeca just in time for the neighborhood’s annual film festival.

The “House of Cards” executive producer  and director of hits such as “Gone Girl,” “Fight Club,” and “The Social Network” snagged a pricey 3-bedroom, 3-bath apartment in a turn-of-the-last-century building where filmmaker Steven Soderbergh also lives, according to Variety.

Like many celebrities looking for privacy, Fincher chose a building with just 12 residences and private elevator access. He paid more than $5 million for the 2,205-square-foot space, which includes a 32-foot-long living and dining area, a breakfast area with built-in banquette seating and a kitchen with a double-oven cooker and two Sub-Zero refrigerator/freezers.

He and his partner, producer Cean Chaffin, still own an estate they bought almost two decades ago in Los Angeles’ trendy Los Feliz neighborhood.

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