Earthquake insurance??

[Bernardo de La Paz]

1. Homeowner or renter?

The fundamental question is ... can you carry a total loss? If you have a mortgage and can't pay it off while renting elsewhere, a quake could ruin you. Most mortgages insist on insurance. Check with your mortgage broker and read the fine print.

If you are a renter and can buy $5,000 to 15,000 worth of possessions to get re-established (maybe including a cheap used car), then maybe bank / invest the insurance fee. Park your car away from structures.

Insurance is betting against yourself, so use it to avoid having your life flattened. If you can stand up from a total loss and carry on in a way you find acceptable, maybe somewhat pinched, then consider avoiding it. Easier when renting.

What do insurance companies do with the fees? They invest it. Consider that as an alternative, self-insuring. Takes quite a while to build up a substantial backstop, but it might be the way to go.