Socal Earthquake Insurance: Who's Covered?

Earthquakes are a common occurrence in California, with the state experiencing 90% of the country's earthquakes. Despite this, earthquake insurance is not mandatory and only a small percentage of homeowners have it. In 2019, only 13% of California homeowners had earthquake insurance, and this figure had barely increased from previous years. This is surprising given the high cost of repairs after an earthquake.

The California Earthquake Authority (CEA) is the largest provider of earthquake insurance in the state and offers coverage through any participating insurance company. The cost of earthquake insurance in California varies depending on several factors, including the location of the home, the cost to rebuild, the type of construction, and the coverage selected. On average, homeowners in California pay around $739 per year for earthquake insurance, but this can range from $800 to $5,000.

One reason for the low uptake of earthquake insurance could be the cost. Earthquake insurance is expensive and can double the cost of covering your home, adding an average of $800 a year in premiums. Another reason could be that people don't think it will happen to them or that the government will step in to help. However, this is not always the case, and those without insurance will be liable to pay for repairs themselves.

Earthquake insurance is not mandatory in California, but it is recommended due to the high risk of earthquakes in the region

California is known for its high risk of earthquakes, with nearly 16,000 known earthquake faults across the state. Despite this, earthquake insurance is not mandatory in California. However, it is highly recommended that residents opt for earthquake insurance due to the high risk of earthquakes in the region.

Although earthquake insurance is not compulsory, basic homeowners and renters insurance policies do not typically cover earthquake damage. This means that without separate earthquake insurance, residents will be responsible for covering 100% of the costs to repair their homes and replace their belongings after an earthquake.

The California Earthquake Authority (CEA) is a non-profit organisation that provides most residential earthquake insurance policies in California. The CEA offers earthquake insurance for homeowners, mobile home owners, condo unit owners, and renters. While you cannot buy an earthquake insurance policy directly from the CEA, you can purchase it from insurance companies that are members of the CEA.

The CEA offers various types of coverage, including dwelling coverage, personal property coverage, and additional living expenses coverage. Dwelling coverage includes your house and any attached structures, such as an attached garage. Personal property coverage includes items such as furniture, appliances, and jewellery. Additional living expenses coverage reimburses you for expenses like lodging, meals, and laundry if you need to live elsewhere while your house is being repaired.

The cost of earthquake insurance in California depends on several factors, including the location of your home, the cost to rebuild, the type of construction, the coverages selected, and the deductible. The average earthquake insurance cost in California is $738 annually. The CEA offers discounts on earthquake insurance for homes that have been retrofitted for earthquakes, with discounts ranging from 10% to 25% based on the age of the home and type of foundation.

While earthquake insurance is not mandatory in California, it is strongly recommended for residents due to the high risk of earthquakes in the region. By having earthquake insurance, Californians can protect themselves from the potentially devastating financial consequences of earthquakes.

Only 13% of California homeowners have earthquake insurance, despite two-thirds of earthquake damage in the US occurring in the state

Despite California being vulnerable to earthquakes, only 13% of California homeowners have earthquake insurance. This is surprising given that two-thirds of earthquake damage in the US occurs in the state.

There are several reasons why so few Californians have earthquake insurance. Firstly, people don't think earthquakes will happen to them, and they believe that insurance is too expensive. Earthquakes are also relatively rare, and it's not always obvious that one is going to occur, so people often don't consider it a priority. Additionally, many people assume that earthquake damage is covered by their homeowner's insurance policy, which is not the case. Some also believe that the government will provide financial assistance in the event of an earthquake, but this support is typically limited.

The cost of earthquake insurance is a significant factor in the low uptake. Earthquake insurance can be very expensive, often doubling the cost of covering a home. The deductible, or amount the policyholder must pay before coverage kicks in, can also be high. As a result, many people decide that the cost of insurance outweighs the risk of earthquake damage.

However, the low rate of insurance uptake could also be due to a lack of awareness or understanding of the risks. California has nearly 16,000 known earthquake faults, and the entire state is vulnerable to earthquakes. Scientists predict that a major earthquake is likely to occur in the near future, which could cause catastrophic damage.

In the wake of recent earthquakes, there has been an increase in interest in earthquake insurance, with more people visiting the California Earthquake Authority website to learn more. It remains to be seen whether this will translate into more people purchasing insurance policies.

Earthquake insurance is expensive, often doubling the cost of covering a home, and can be difficult to justify financially

One of the main factors that influence the cost of earthquake insurance is the location of the home. Homes located in high-risk areas, such as near fault lines, tend to have higher premiums. For example, homeowners in California pay significantly more for earthquake insurance than those in other states. Additionally, older homes that lack upgraded safety features to mitigate earthquake damage also result in higher insurance costs.

The number of stories in a home can also impact the cost of insurance. A home with multiple stories will likely cost more to insure against earthquakes than a single-story home, as there is a higher risk of damage. The rebuilding cost is another crucial factor, as a higher home value and rebuilding cost will lead to higher insurance premiums.

The high cost of earthquake insurance can be a burden for many homeowners, especially when combined with high deductibles. Deductibles for earthquake insurance tend to range from 10% to 25% of the coverage limit, which can result in significant out-of-pocket expenses if a claim is filed. This makes it challenging for some homeowners to justify the expense, especially if they feel the likelihood of an earthquake occurring in their area is low.

However, it is important to consider the potential risks and costs associated with not having earthquake insurance. Earthquakes can cause extensive damage to homes, and without insurance, homeowners may be left with tens or even hundreds of thousands of dollars in necessary repairs. While it may be expensive, earthquake insurance can provide valuable protection and peace of mind for those living in areas prone to seismic activity.

The California Earthquake Authority (CEA) is the largest provider of earthquake insurance in the country

The California Earthquake Authority (CEA) is the largest provider of earthquake insurance in the United States. It was created by the California Legislature in 1996, two years after the Northridge earthquake, which caused an estimated $26.4 billion in insured losses.

The CEA is a non-profit entity that is privately funded and publicly managed. It is not a state government agency and does not receive money from the state budget. Instead, it is financed through insurer contributions, policyholder premiums, and investment returns. The CEA is overseen by a five-member board, which includes California's governor and insurance commissioner.

The CEA offers earthquake insurance policies for homeowners, mobile home owners, condo-unit owners, and renters. It works with 20 participating residential insurance companies to provide coverage to over 1 million California households. CEA policies are not sold directly to consumers but must be purchased through one of the CEA's participating insurers.

The CEA's rates are based on science, not profit, and are regulated by the California insurance commissioner. The CEA offers flexible and affordable coverage options, with premiums determined by factors such as the location of the home, the age and characteristics of the home, and the coverages and deductibles chosen.

While earthquakes are unpredictable, preparing for them is essential. The CEA provides resources to help Californians understand their earthquake risk and take steps to protect their homes and families. This includes creating an earthquake safety plan, identifying safe places in the home, assembling disaster safety kits, and retrofitting homes to make them more resistant to earthquake damage.

By offering affordable and flexible insurance policies, the CEA plays a crucial role in helping Californians recover from damaging earthquakes and providing peace of mind to its policyholders.

Earthquake insurance policies can be purchased through homeowners insurance providers or directly from insurance companies that are members of the CEA

Earthquake insurance is not mandatory in California, but it is a good idea to have it as earthquakes can strike without warning and can cause extensive damage to your home and belongings. Standard homeowners and renters insurance policies do not typically cover earthquake damage, so you may need to buy an endorsement or standalone policy for earthquake coverage.

The California Earthquake Authority (CEA) is one of the biggest residential earthquake coverage providers and offers insurance through many home insurance providers. There are currently 22 property insurance companies that sell CEA coverage. However, CEA does not sell standalone policies, so to qualify for CEA insurance, you must have a homeowners insurance policy with one of the participating insurance companies.

The other option for buying earthquake insurance in California is to purchase a standalone policy through a private insurance company such as GeoVera, Arrowhead or Jumpstart.

When deciding where to purchase earthquake insurance from, it is important to consider the following:

• The age of your home
• The materials your home is built with
• The type of foundation
• The home’s proximity to a fault line
• Reconstruction costs

Frequently asked questions