Will homeowners insurance pay if your house falls off a cliff?
Not unless you have what’s called an added DIC — or Difference in Conditions — policy, as it turns out.
That could be an issue for residents of the 12 Peartree Lane homes, in Rolling Hills Estates, that were destroyed by a massive and rapidly moving landslide on Saturday afternoon, July 8.
Warnings allowed folks to evacuate quickly — and safely. But residents of the homes that will fall into the canyon below — 10 of the 12 are likely to do so — were left grappling with what’s next. And even those whose homes remain have concerns about the future.
A landslide is considered an “earth movement” event and, like an earthquake, is excluded from standard homeowners and business insurance policies.
Homeowners insurance policies include an “excisions clause” that exclude earthquakes, volcanic eruptions, mine subsidences, mudslides, mud flow, earth sinking, and geological rising or shifting — and landslides.
“Earth movement is not covered,” said Janet Ruiz, director of strategic communications for the Insurance information Institute.
That institute is an industry association that aims to increase public understanding of how insurance works.
Just as separate earthquake insurance is available, a DIC policy — which can also cover earthquakes — will provide additional protection for those who live in areas like the Palos Verdes Peninsula, where land movement often comes as a trade off for the beautiful, cliff-top views.
The additional policies for landslide coverage, she said, are expensive — from several hundred to a few thousand dollars — but many homeowners in those areas have the financial wherewithal to take out the extra protection.
“We see a lot of folks like celebrities or business owners who want to live with an amazing view and they’ll take on that risk,” she said, along with the added insurance.
And anyone buying homes in those areas should also pay for geological surveys as part of the purchasing process.
“I moved up (to the Palos Verdes Peninsula) about two years ago,” said Cary Bichlmeier, president of Bichlmeier Insurance in Redondo Beach. “It’s beautiful.”
But standard homeowners policies, he said, won’t protect residents if the land moves or gives way. (A standard comprehensive automobile insurance policy, however, will cover the loss of your car if that goes over a cliff along with your house, Ruiz said.)
It’s risky, he said, “and you have to do your due diligence if your’e near a cliff.”
While he said the recent slide was “surprising,” he also noted that the area has been experiencing movement for many years now.
“It’s a big tragedy,” he said.
A landslide, though, is also different from many other disasters, said Frank Zerunyan, a Rolling Hills Estates councilmember who lives above a different canyon. That’s because you don’t just lose the home — but the land.
”It’s one thing to lose your home to a fire, but this is entirely different,” Zerunyan said. “Not only is your home gone, you can’t rebuild. The land is gone as well.”
Having a geological inspection for homes as part of the purchase process is common on the Palos Verdes Peninsula. It’s unclear, though, whether the Peartree Lane residents took that extra step.
“I’ve always recommended after the physical inspection (in buying a house),” said Realtor Sandra Allbee, “to get a geological” assessment.
As for 7o or so other homes that remain in the neighborhood, there’s also another concern: property values.
“That’s the million dollar question,” Allbee said. “That’s going to be up to the buyers. It might have a temporary affect but not a long-term affect. In the Portuguese Bend area, one of the major landslide (areas) in the country, property values are quite high, over $1 million.”
The Portugues Bend area is also on the Peninsula, in Rancho Palos Verdes, and officials there are working on a $33 million plan to lessen the risk of landslides.
The ocean views and lush, open spaces will always make “The Hill,” as its affectionately known, a desirable place to live, Allbee said.
“To me, it’s actually the most beautiful place on Earth,” she said. “We have not only the ocean but the canyons and all that open space. We have beautiful walking and horse trails.”
Still, the loss of property will no doubt have some residents and potential buyers thinking hard about some of the risks that come with those views.
“It’s devastating,” Zerunyan said in a Sunday afternoon interview. “I’ve never seen anything like it.”