The HOA Board Quarterly Spring 2014 Issue #9 | Page 13

Earthquake Insurance for the Condominium Owner

By Michael Berg
question was recently posed to me, and it’s one
I get often at board meetings: Can condominium
unit owners buy earthquake insurance to cover
the structure containing their unit? The answer is no.
That is, they cannot purchase the insurance in the
same way they purchase auto insurance covering their
car, or property insurance covering their belongings.
You see, the condominium owner does not own the
structure that forms the building that contains the
residential units. The owner “owns” the air space
defined by the structure. The structure itself is owned
by all of the members of the association in common.
The association is the only entity that can purchase
coverage for the structure, which is a decision made
by the board of directors.

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As such, and in particular when a condominium
association does not carry an earthquake insurance
policy, condominium owners want to know if they
should purchase the earthquake insurance offered to
them in companion to their condominium unit owner’s
policy. My answer, without hesitation, is yes. Now,
some may say that’s the salesman in me, and I respect
that. But the truth is that the purchase of the offered
earthquake insurance is the only way a condominium
owner can protect against the assessment he or she
may receive if association property is damaged by an
earthquake.
If an earthquake occurs, each owner is exposed to
an assessment for the repair of damaged property.
Whether it’s the building housing his or her unit, or
a building on the opposite side of the complex, each
member will likely be assessed their share of the repair
costs. That cost is for the repair of the structure, so
in a way, by purchasing the offered coverage for
earthquake loss assessment, the owner is purchasing
insurance for the buildings in the association.

Buying earthquake insurance would imply that the
member could call his carrier and file a claim for the
damage to the building. But he can’t, because he
doesn’t own the building. However, he can purchase
insurance for the $15,000 assessment. That is called
earthquake loss assessment insurance, and coverage
is available to the individual unit owner.
The most common earthquake loss assessment
insurance coverage is purchased through the
California Earthquake Authority (CEA, w