Who is Motus Insurance Services?

Motus is a wholesale insurance broker.  As a wholesale broker we sell our product through appointed retail insurance brokers who specialize in the needs of common interest developments (condominiums).  As a broker we are legally obligated to work in the consumer’s best interests rather than the insurance company’s best interest.  

Motus has designed the Motus Earthquake Insurance Program to meet the specific needs of California condominium owners.  Our underwriting partner is Aegis Security Insurance Company — an “A” rated insurance company who is admitted to do business in the State of California.

What is the Motus Earthquake Insurance Program?

The Motus Earthquake Insurance Program is a new insurance product designed to meet the specific needs of California condominium owners.  Prior to the Motus Program, unless your homeowners’ association elected to obtain a master earthquake policy, the main option available was through the California Earthquake Authority (“CEA”).  CEA policies offer some protection for condominium owners, but that protection is incomplete.  For example, CEA policies do not cover damage to shared assets, like common areas, pools and foundations.  Furthermore, CEA earthquake insurance is only available as a companion policy to an individual fire insurance policy — therefore if your homeowners’ association purchased adequate fire insurance at the Association level, but has not purchased a master earthquake insurance policy, you may be unable to purchase a CEA policy (unless you are willing to buy duplicative fire insurance).

Who is responsible for paying claims?

The underwriter for the Motus Earthquake Insurance Program is Aegis Security Insurance Company (“Aegis”).  Aegis is rated “A” by A.M. Best and is approved to do business in the State of California.  This means that the State of California will ultimately back claims on an Aegis policy (up to the policy limit or $500,000 whichever is less).

Am I eligible for the Motus Earthquake Insurance Program?

The first step toward eligibility for the Motus Earthquake Insurance Program is for your homeowners’ association to enroll in the program.  For a minimal fee, Motus Insurance Services representatives and retail insurance experts will work with your HOA board to design a policy around the specific needs of your homeowners’ association.  Factoring in the total insurable value of your complex along with your HOA’s Covenants, Conditions and Restrictions (CC&Rs).  Once a policy has been designed for your HOA, you will receive an email directing you back to to get a rate quote based on your specific policy needs.

If your HOA is not currently enrolled in a Motus Earthquake Insurance Program, please *Contact Motus* to take the first step toward connecting your property manager or HOA board with one of our partner brokers.  Together, we will work with your property manager or HOA board to set up a program for your HOA.

What can I do if my Homeowners’ Association is not enrolled in a Motus Earthquake Insurance Program?

If your HOA is not currently enrolled in a Motus Earthquake Insurance Program, please *Contact Motus* to take the first step toward connecting your property manager or HOA board with one of our partner brokers.  Together, we will work to set up a Motus Earthquake Insurance Program for your HOA.

What is the point of buying earthquake insurance if all the other unit owners do not also have earthquake insurance?

We hear this question a lot.  If the other members of your association decide not to purchase earthquake insurance, that is not wise on their part, however it should never affect your decision.   Let us say you live in a condo association with 100 units and only 20 members buy earthquake insurance (or have the liquid capital to pay their share of an assessment to repair the damages from an earthquake).  The association will take the earthquake proceeds from the 20 members that had earthquake insurance and will rebuild the association.  Now if the association had 10 buildings before the earthquake, the association may only have 2 buildings after the earthquake.  However, those that had earthquake insurance will keep their homes and the value of their land.  If the association decides to not rebuild we will pay you directly the value of the earthquake policy.  If you were assessed $250,000, and the association did not rebuild, we would pay any earthquake coverage proceeds directly to you.

How is the Motus Earthquake Insurance Program different from insurance offered by the California Earthquake Authority?

Prior to the Motus Earthquake Insurance Program, earthquake insurance for Californians living in Condos has been offered through the California Earthquake Authority (“CEA”).  CEA-based insurance, while well suited to single-family homeowners, does not provide comprehensive coverage that handles the specific needs of condominium owners.  In particular, CEA insurance does not provide any insurance for common areas.  This leaves individual condominium owners completely exposed to assessments for damages to detached garages/carports, pools, foundations, and so on — even chimneys.  Furthermore, CEA only offers up to $100,000 for loss assessment or $100,000 for building coverage (and does differentiate the two coverages – see below for further discussion) however your home may be worth significantly more than $100,000.

The Motus Earthquake Insurance Program has been designed to meet the specific needs of condominium owners.  Assessments for damage to common amenities are covered, as is your personal property (optional).  When your condominium association enrolls in a Motus Earthquake Insurance Program, Motus Insurance Services experts work with your HOA board to design a policy around the specific terms of your homeowners’ association Covenants, Conditions and Restrictions (CC&Rs).   Motus will allow you to purchase more than $100,000 for your structure.

Does the U.S. Government provide any assistance to condominium owners affected by an earthquake?

The federal government safety net for condominium owners affected by earthquakes is essentially non-existent.  The only federal assistance available to them is the Federal Emergency Management Agency’s disaster loan program.  These loans have a cap of $5,000, and even that amount can only be claimed for health and safety.  An owner must apply for the loan in order to be eligible, and this application is processed by the Small Business Administration — adding another layer of bureaucracy.

What’s the difference between Loss Assessment and Building Coverage?

In the event of earthquake damage to your condominium complex, the homeowners’ association may ask some or all of the members of the homeowners’ association to share in the cost of repairs.  Depending on the details of your association agreement (including the CC&Rs), this request for contributions may come in the form of a Loss Assessment, which will be shared among all members of the association, or the repair expense recovery may be targeted at only those owners who were directly affected by the earthquake (building coverage).  

In the past, these two forms of expense recovery were viewed by insurers as separate and distinct risks.  Without consulting with a specialist lawyer, it can very difficult for individual owners to determine which form of coverage — Loss Assessment coverage or Building Coverage — they need until after an earthquake strikes.  As a result, many owners have purchased coverage that doesn’t match their exposures.

Motus Insurance Services is the first to offer combined Loss Assessment and Building Coverage, removing the uncertainty.  A Motus attorney will work with the condominium association board to determine exactly what type of coverage is appropriate under your association’s management agreement — ensuring you have the type of coverage you need.

How does the deductible work?

The deductible under the Motus Earthquake Insurance Program is a “Per Occurance” deductible. This means the maximum deductible is based on the total reconstruction value of the entire HOA, and an individual’s deductible is based on his or her share of that value. So for a 100 unit HOA with a reconconstrution value of $10mm, a 10% deductible program would mean the total deductible is $1mm. This would be allocated to individual owners, usually on a pro-rata basis, so the maximum deductible $10,000 per owner (based on 100 units, allocated evenly). Note that the maximum deductible does not depend on the amount of insurance an owner purchases under the Motus Program — whether the owner purchases $50,000 of coverage or $125,000 of coverage (the maximum that would be available in this example), the maximum deductible would remain $10,000.

When can I enroll in the Motus Earthquake Insurance Program?

Once your condominium association signs up for the Motus Earthquake Insurance Program, you will have 2-3 months to elect to have coverage.  Once that period expires, you will have an opportunity to elect coverage the following year when the Motus Program renews.

Can I cancel my coverage at any time?

Yes, you have the right to cancel at any time.  However, a minimum of 25% of your total annual premium is due up-front and is non-refundable.

Do I need Building Property / Interior Coverage?

Whether or not you need Building Property / Interior Coverage will depend on your Homeowners’ Association Agreement and your specific CC&Rs.  Some associations have only “Bare Wall” responsibility, which means they would repair the walls, but would not be responsible for other interior structures — including cabinets, appliances, lighting, etc.  Other associations have “As Originally Built” responsibility, which means returning the condominium to the state it was in when built (e.g., they would repair cabinetry and appliances).  Condo owners in “Bare Walls” condominium complexes have exposure to several repair / replacement expenses that Building Contents coverage can mitigate.

 Your Motus representative or your specialized appointed insurance agent will help you figure this out.  Since Motus combines loss assessment and building coverage will we cover your building contents/building interiors no matter what your CC&Rs states.

My home is worth $500,000 but I can only buy $200,000 of loss assessment / building coverage.  Is that enough?

It always depends on your particular association and your unit’s particular exposure.  However, if your home is worth $500,000 much of that value stems from the land and land is not insurable. Therefore, in most cases, $200,000 of coverage will be adequate.  The reconstruction costs for most condo associations range from $130 – $230 price per square foot.  If your unit is 1,000 square feet, your exposure will most likely fall between $130,000 – $230,000.  Your Motus representative will look at the construction costs of your association along with the requirements set forth in your association’s CC&Rs when recommending the proper coverage for the individuals unit owners in your association.

I can only buy $15,000 of personal property.  Is that enough?

We cannot answer that question with certainty.  When we created our program, our focus was to make sure you have adequate coverage for your exposure to your building and loss assessment.  However, since most (if not all) earthquake products put sublimits on personal property coverage for glassware, electronic equipment and fine arts of $3,000 (or less) it seemed off to offer a lot of personal property.  If we would only pay out $3,000 for glassware – which is likely to be the majority of the damage from an earthquake – offering $50,000 or $100,000 for personal property would mean offering more coverage than most individuals would be able to claim.  Therefore, we feel that $15,000 of personal property is sufficient and realistic for a majority of our clients.

What is Loss of Use or Loss of Rents?

If you occupy your condo and are forced to relocate after an earthquake, our policy covers up to $20,000 for the additional rent that you will need (loss of use).  On the other hand, if you rent your condo to a tenant, and that tenant is forced to relocate after an earthquake, this $20,000 will cover your lost rents while your rental unit is uninhabitable.

Tell me about the reinsurance that the Motus program procures?

Our primary carrier takes a conservative approach to reinsurance. Our reinsurance is based on a 1-in-250-year probability event. This means that our reinsurance is better-suited to cover the damages that a large earthquake would incur.

Since our carrier is also backed by the California government, if for some unforeseen reason, there is not enough money between the primary carrier and the reinsurance, the California government will pay up to the lesser of the full policy value or $500,000.

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