Earthquake insurance is specialized coverage for seismic damage — typically not included in standard landlord policies. California Earthquake Authority and private carriers both offer policies. Expensive; many LA owners forgo.
Earthquake deductibles are typically 5-20% of the coverage amount, creating large out-of-pocket exposure even with coverage. Premiums are substantial. Many LA multifamily owners self-insure (no earthquake policy) given the cost and deductible structure.
LA is earthquake country. Whether to carry earthquake insurance is a personal risk tolerance decision. Lenders sometimes require it on specific properties (older soft-story buildings, non-ductile concrete). For sellers, verify whether current coverage exists and disclose appropriately.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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