Frequently Asked Questions
Who is Motus Insurance
Why is Special Assessment Coverage So Important?
Why Should I Buy Insurance if My Neighbor Doesn't?
Motus is a wholesale insurance broker. We sell our products through appointed retail insurance brokers who specialize in the needs of residential and commercial associations (including condominiums, townhomes, and other similar communities – see below for more information). As a broker, Motus is legally obligated to work in the consumer’s best interests rather than the insurance company’s best interest. Motus can also sell the program directly to associations that qualify. There is no discount for working directly with Motus; we simply need to serve associations that our appointed retail agents do not represent.
Motus created the Opt-In Master Earthquake Program to meet the specific needs of condominium owners and association boards. Our underwriting partners are Insurance Company of the West, Aegis Security Insurance Company, and Palomar — all are rated “A- / Excellent” or better by AM Best (go to www.ambest.com for more information on ratings).
• Community apartment projects, as defined in California Civil Code section 4105;
• Condominium projects, as defined in California Civil Code section 4125;
• Planned developments, as defined in California Civil Code section 4175;
• Stock cooperatives, as defined in California Civil Code section 4131; or
• Commercial or Industrial projects, as defined in California Civil Code section 4202.
If you have any questions about whether or not the Motus Program is right for your association, please contact Motus directly.
Owners have 30-45 days to decide whether they would like to purchase custom-built earthquake insurance. During that enrollment period, Motus will host several webinars and potentially a townhall to educate association members on the earthquake program, and answer the many questions that come with earthquake insurance.
1) For the Association (the corporation), having as many people buy full coverage earthquake insurance is critical. When more association members purchase insurance, the association’s ability to rebuild increases, and the time to rebuild generally decreases. Most importantly, it gives the association a much better chance to secure a Small Business Association (SBA) disaster loan of up to $2,000,000. The savings in interest on this loan alone, over 30 years, can be well over $1,500,000. The SBA disaster loan is interest-free for the first 12 months and currently 2.5% after that. The Motus program can also help secure and collateralize a private loan if that is needed.
2) For the board, this helps reduce its largest D&O exposure: failure to maintain insurance. Some D&O policies cover this, but most do not protect the individual directors from lawsuits after an earthquake. By enrolling, the board is clearly documenting its consideration of earthquake insurance (the legal minimum). The Motus Program allows the board to claim even more: “We not only considered earthquake insurance, we offered it to all unit owners.” The Motus Program is a clear, proactive step that demonstrates that the board is fulfilling its obligations.
3) As for the unit owners, they can all access earthquake insurance, which is a big deal. In the absence of a master earthquake policy, roughly 70% of association members / unit owners are not eligible to purchase earthquake insurance. It also finally allows unit owners to fully protect the equity in their home – buying coverage for foundations, underground pipes, common areas, residential buildings and the interior of their units. It saves the unit owners a lot of money since they can access actuarially sound underwriting and pricing. The policy also has a guaranteed cash value if the association decides to not rebuild.
Motus Earthquake Insurance Programs are backed by the largest, most financially-sound earthquake insurance companies that provide insurance for residential and commercial associations. Specifically, Motus works with Insurance Company of the West (“ICW”), Aegis Security Insurance Company (“Aegis”) and Palomar Group (“Palomar”). All three carriers are rated at least “A- / Excellent” or better by AM Best. If you are a Motus client, consult your Motus Program materials to see which of our carriers backs your association’s program. If you would like to read more about the financial strength of our insurers, go to the AM Best website (www.ambest.com).
With that said, statistically speaking, associations almost always rebuild after a catastrophic event. If your association is enrolled in Motus, roughly 10-30% of unit owners will have full earthquake coverage. For the other 70-90% of units that do not have earthquake insurance, they will need to pay their pro-rated share of damages to common areas, residential buildings and unit interiors (this will be done through an assessment), through their savings or by securing a secondary loan. If they can’t do this, their lender will step in, foreclose on their unit, and pay for the damages on their behalf. The association can also pay on behalf of delinquent owners and put a lien on their unit. Associations can apply for a $2,000,000 SBA loan from the federal government to help offset any shortfalls.
In short, if other members of the association decide not to purchase earthquake insurance, that is not wise on their part, however it should never affect your decision.
Because CEA’s policy is an HO-6 companion policy (like other individual options available), a condominium owner must have an HO-6 policy in order to be eligible to purchase coverage. And here is a major problem: fewer than 1 million condo owners in California have an HO-6 policy, leaving over 1.5 million owners without access to earthquake insurance!
The Motus Opt-in Master Earthquake Program allows condominium owners to access coverages under a traditional master policy. This means they can now buy coverage for damages to foundations, underground pipes, pools, other common areas, residential buildings and unit interiors. Unit owners can also buy full coverage even if that means you need $5,000,000 – as is needed for large units in new high-rise buildings – or as little as $200,000 for small studios in older garden-style associations. Lastly, the pricing is based on the underwriting precision of a master policy – meaning Motus is usually a fraction of the cost for this superior coverage.
In short, CEA was meant to supplement a master policy, not replace one. Only Motus can offer these critical coverages that protect the equity in your home.
The association can apply for a $2,000,000 loan from the Small business association (SBA) to help pay for damages to common areas and residential buildings that were not covered by a master insurance policy. These loans are very competitive and roughly 50% of condos that apply for them, receive them. These loans have a 30-year term, are interest free for the first 12 months and a rate of 2.5% after that. These are incredible terms on a loan, so whether or not your association decides to rebuild, it is critical that your boards quickly apply for an SBA loan after a disaster. The association does not have to take the loan but getting an SBA loan approval is a MUST. If your association enrolls into Motus, this will help your association qualify for this SBA loan.
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 individual unit owners in your association.
- Both the Bay Area and Greater LA are expected to experience an earthquake as powerful as the 1994 Northridge Earthquake by 2043
- Northridge was the most powerful earthquake to hit Greater Los Angeles since records have been kept, at a magnitude of 6.7
- Northridge caused more than $40 billion of damage. This is 2X the damage caused by all the wildfires in California from 2017-2019
If you occupy your condo and are forced to relocate after an earthquake, some of our programs offer coverage 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 coverage applies to your lost rents while your rental unit is uninhabitable. Note that this coverage is not available in all programs — consult your program materials for more information, or contact Motus directly.