Landslide policy: Buy or bypass?

The recent Laguna Beach landslide has prompted some Southland homeowners to consider landslide insurance.

Like earthquake insurance, landslide policies must be purchased separately from the typical homeowners insurance. Landslide policies primarily are underwritten by Lloyd’s of London and are available through insurance brokers. Large insurers, such as State Farm, Farmers and Allstate do not offer them.

Landslide insurance covers the rebuilding of a destroyed home but does not cover the cost of stabilizing the ground, which often is expensive, said George Lefcoe, a USC professor specializing in real estate law. Nor does the insurance cover upgrades to the new dwelling, which may be required legally, he added.

The coverage is expensive too. Premiums on a landslide policy for an $800,000 home in Southern California, for example, could run about $2,580 per year, said Joshua Feinauer, an administrator at insurecat.com, an online insurance brokerage in Salt Lake City that offers such policies. The insurance covers the cost to rebuild the original home; $50,000 maximum for additional structures; up to $75,000 for personal property; and up to $25,000 for additional living costs while the home is being rebuilt.

The standard deductible on a landslide policy is 5% of the home’s value, with a separate $1,000 deductible for living expenses under certain policies, Feinauer said.

Residents outside of California may wrap their extra earthquake, flood and landslide insurance coverage into one policy. Californians, however, must purchase separate policies, each of which runs about the same price, Lefcoe said. Landslide insurance is temporarily unavailable in Laguna Beach, Feinauer said.

So who should buy landslide policies? “If you’re having trouble sleeping at night because you imagine yourself being on the 7 o’clock news, Google ‘landslide insurance’ and contact the brokers you find,” Lefcoe said. “If it’s a risk you can live with, save your money.”