Ask Finney: Earthquake insurance, auto extended warranties, the stock market

SAN FRANCISCO (KGO) -- 7 On Your Side's Consumer Expert Michael Finney answers your consumer questions.

Question 1:

Gayle asks: Is earthquake insurance worth getting? It looks expensive.

Answer 1:

It is very expensive. Premiums for earthquake insurance range from about $1,000 to $5,000 a year. It depends on how much your house is worth and where it is located. If you live on flat land, far from an earthquake fault, think towards $1,000 a year. If you have a home on stilts, think more like $5,000. Earthquake insurance also usually comes with high deductibles. Think 15 percent. So the owners of a $1 million home must have an earthquake loss of more than $150,000 before they see a dime. If you own your house outright, it is probably worth buying. If you just started making payments, maybe not.

Question 2:

Erica from Hayward asks: People have mixed feelings about extended warranties for cars. What do you recommend? Are they worth it?

Answer 2:

I generally do not like extended warranties, but for cars I am neutral as long as you get a factory extended warranty, and negotiate the price. The down side? Most buyers get less in repairs than what they spent on the warranty. The upside? You are buying peace of mind, you won't get hit with a big repair bill, and that peace of mind is worth something. Also, it allows you to know exactly what your car is going to cost you and allows you to finance any potential repairs.

Question 3:

Cameron from San Rafael asks: How can I make the most money on the side, in addition to my regular job, with the stock market?

Answer 3:

A lot of people have gone broke trying to answer that question, so let me give you some very conservative advice. Start at your work with the 401(k) plan. If your employer offers one, they will probably match your contribution... at least partially. That is a killer deal. You also don't pay tax on the money until you take it out in retirement. If you still want to invest, the most important thing you can do is educate yourself. Start by reading Kiplinger's magazine. It is understandable and doesn't talk down to its readers.
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