Bay Area Residents Embrace Earthquake Insurance

Earthquakes are a fact of life in California, and while we don't know when they will happen, we do know they can cause a lot of damage to homes and belongings. As a result, many people in the Bay Area choose to have earthquake insurance, which covers damage to homes, belongings, and other buildings on the property. The cost of earthquake insurance depends on the value of the home and the likelihood of earthquakes in the area. For example, in San Francisco, insuring a single-family house against earthquakes could cost anywhere from $4.08 to $4.58 per thousand dollars of coverage. The California Earthquake Authority (CEA) is one of the largest providers of residential earthquake insurance in the world and offers policies for homeowners, mobile home owners, condo owners, and renters.

The California Earthquake Authority (CEA) is one of the largest providers of residential earthquake insurance

The California Earthquake Authority (CEA) is a non-profit entity that was established in 1996 to address a serious financial crisis. The 1994 Northridge earthquake, which caused an estimated $26.4 billion in insured losses, left insurance companies hesitant to issue new homeowners policies. In response, the state of California authorised the creation of the CEA.

The CEA is the largest residential earthquake insurer in the US, issuing 65% of the residential earthquake policies sold in California. It is not an insurance company itself, but rather a marketplace for earthquake insurance. It works with 20 participating residential insurance companies to offer earthquake insurance to homeowners, mobile home owners, condo-unit owners, and renters.

The CEA offers affordable and flexible policies based on the best available science. Its insurance rates are based on factors such as the age, location, and type of structure being covered. The CEA also offers premium discounts for older homes (up to 25%) and mobile homes (21%) that have been properly retrofitted to withstand earthquakes.

Basic California Earthquake Authority insurance covers:

• House damage, up to the same dollar amount covered by your homeowners insurance policy.
• Personal belongings, from $5,000 up to $200,000.
• Additional living expenses or loss of use, from $1,500 up to $100,000.

The CEA also offers a Homeowners Choice policy, which allows customers to purchase separate coverage options instead of a bundled package.

With more than 1 million policyholders, the CEA is one of the world's largest providers of residential earthquake insurance. It encourages California residents to reduce their risk of earthquake damage through education, mitigation, and insurance.

Earthquake insurance covers damage to your home, belongings and other buildings on your property

Earthquake insurance is an optional coverage that provides protection against the damage that an earthquake can cause to your home and property. It covers damage to your home, personal belongings, and other buildings on your property.

Damage to your home

The first part of earthquake insurance is dwelling coverage, which helps you pay to repair or rebuild your home after earthquake damage. The limit on your earthquake insurance is typically the same as the limit on your homeowners insurance. However, it's important to note that earthquake insurance does not cover landscaping, pools, fences, masonry, or separate buildings.

Damage to your belongings

The second part of earthquake insurance is personal property coverage, which covers damage to items in your home, such as furniture, TVs, and computers. The limit on this coverage typically starts at $5,000 and can be increased to $25,000.

Damage to other buildings on your property

The third part of earthquake insurance covers other structures on your property, like a shed. If these structures are damaged in an earthquake, your insurer may help you pay for repairs.

Overall, earthquake insurance can provide valuable protection for your home, belongings, and other buildings on your property in the event of an earthquake.

The cost of earthquake insurance depends on the value of your home

The cost of earthquake insurance depends on several factors, with the value of your home being a key consideration. Here are some factors that influence the cost of earthquake insurance in the Bay Area:

Location and Risk

The location of your home in the Bay Area plays a significant role in determining the cost of earthquake insurance. If your home is situated in a high-risk area, you can expect to pay higher premiums. The proximity to fault lines and seismic activity will impact the price of your policy. Living in an area with a higher likelihood of earthquakes will generally result in more expensive coverage.

Age and Construction of the Home

The age of your home is another factor that insurance companies consider when calculating earthquake insurance rates. Older homes, particularly those without upgraded safety features or retrofitting to mitigate earthquake damage, will typically be more expensive to insure. The construction type of your home also matters. Homes built with brick or masonry tend to have higher insurance costs due to their increased vulnerability to earthquake damage.

Number of Stories

The number of stories in your home is a crucial factor in determining earthquake insurance costs. A multi-story home will generally demand higher premiums compared to a single-story residence. The increased height and structural complexity of multi-story homes present a greater risk of damage during an earthquake.

Rebuilding and Replacement Costs

The estimated cost to rebuild your home and replace its contents is a significant factor in calculating earthquake insurance premiums. The higher the value and rebuilding cost of your home, the higher the insurance premiums you can expect to pay. This takes into account the replacement cost of materials and the overall value of your home's contents.

Deductibles and Coverage Limits

The deductible you choose for your earthquake insurance policy will also impact the cost. A deductible is the amount you will have to pay out-of-pocket before your insurance coverage kicks in. Generally, a higher deductible will lead to lower insurance premiums, as you are assuming more of the financial risk. Additionally, the coverage limits you select will affect the cost. Higher coverage limits provide more comprehensive protection but come at a higher price.

In summary, the cost of earthquake insurance in the Bay Area is influenced by a combination of factors, including the location, age, and construction of your home, as well as the number of stories, rebuilding costs, and the deductibles and coverage limits you choose. These factors collectively contribute to determining the value of your home and the associated insurance costs.

Earthquake insurance is optional but recommended for those living in high-risk areas

Earthquakes are a fact of life in California, and while they are unpredictable, they can cause a lot of damage to homes and belongings. Earthquake insurance is not a legal requirement, but it is recommended for those living in high-risk areas, such as the Bay Area, which has several fault lines running through it. The San Andreas and Hayward faults, for example, pose a significant threat to the region, with the US Geological Survey estimating a 72% chance of an earthquake of magnitude 6.7 or greater in the next 30 years.

The California Earthquake Authority (CEA) is one of the largest providers of residential earthquake insurance in the world and offers policies for homeowners, mobile home owners, condo owners, and renters. Their basic earthquake coverage includes dwelling coverage, personal property coverage, and additional living expenses (ALE) or loss of use. Dwelling coverage includes damage to the home and attached structures, with limits based on the homeowner's insurance policy. Personal property coverage includes items such as furniture, electronics, and appliances, with limits ranging from $5,000 to $25,000. ALE covers temporary costs, such as rental homes, restaurant meals, and moving and storage expenses, with limits ranging from $1,500 to $100,000.

It is important to note that earthquake insurance does not cover all damage caused by earthquakes. For example, damage to vehicles or water damage from outside the home, such as floods or tsunamis, is typically excluded. Additionally, earthquake insurance can be expensive, with rates depending on factors such as the location of the home, the cost to rebuild, the type of construction, and the coverage selected. The deductible, or the amount the policyholder must pay before insurance coverage kicks in, can also be high, typically ranging from 10% to 20%.

When considering earthquake insurance, it is essential to weigh the risks and costs. For those living in high-risk areas, the potential for significant damage to their homes and belongings may outweigh the cost of insurance. However, for those with lower-risk homes or those who feel they can afford to rebuild or repair their homes without insurance, it may not be necessary. Ultimately, the decision to purchase earthquake insurance depends on individual circumstances and risk tolerance.

Earthquake insurance does not cover damage to vehicles or water damage from outside the home

Earthquake insurance is an optional coverage that provides protection against damage caused by earthquakes to your home and property. It is separate from standard homeowners or renters insurance. In California, the law requires home insurance companies to offer earthquake coverage. The California Earthquake Authority (CEA) is the state's primary earthquake insurance provider.

While earthquake insurance can cover repairs to your home and replacement of damaged personal property, it does not cover damage to vehicles or water damage from outside the home. Earthquake insurance typically does not cover damage to your car. If your car is damaged in an earthquake, you will need to check if your auto insurance policy includes comprehensive insurance, which would cover earthquake damage to your vehicle up to your policy limits, minus your deductible.

Additionally, earthquake insurance does not cover water damage from outside your home, such as sewer or drain backup, floods, or tsunamis. For example, if you live near a lake that floods due to an earthquake, earthquake insurance will not cover the damage. You would need separate flood insurance for this type of damage.

Frequently asked questions