I friend of mine purchased a condo in West LA in a 90 unit building. There was an earthquake and only 11 units carried earthquake insurance. There was about 10 million dollars worth of damage. The other 79 units stopped paying their mortgage and HOA fee's. The banks holding those mortgages did NOT foreclose so they wouldn't have to pay to fix up the building. The eleven owners who were current with all payments had to SPLIT the 10 million dollars worth of repairs, then sue the 79 owners for their share of the costs.
So if you obtained earthquake insurance, the insurance company would make the check out payable to:
The owners of record on the Dead, the banks holding mortgages on the loan and the contractor doing the repair work.
Only if you had your property paid off would the insurance exclude the mortgage holder.
--47.151.xx.xxx