The California Earthquake Authority (CEA) is one of the world’s largest providers of residential earthquake insurance and has 76% of the market share in California. It is a privately funded, not-for-profit entity and publicly managed. The state registers earthquakes of significant magnitude more frequently than other states, with 8 of the 10 most expensive quakes in history recorded here.
Types of Policies Offered and Limits
The CEA offers two policies: Homeowners Choice and Standard Homeowners. The differences between the two are very small. The Homeowners Choice option covers your dwelling, building code upgrades, and emergency repairs if your house sustains damage in an earthquake. Any other coverage such as personal property and living expenses are additional and optional. The Standard Homeowners policy bundles all of these individual coverages into one, and saves a policyholder money if they need them.
The limit on CEA earthquake insurance is the same as the limit of your homeowners insurance. The deductible policyholders pay is usually 15% of the limit in the Golden State, although you can purchase a product with a 10% deductible for a higher premium cost.
The limit for personal property coverage of CEA earthquake insurance is usually fairly low - either $5,000 or around 10% of the limit of the policyholder’s home. You can increase the limit up to $100,000 for additional cost. A homeowner would normally choose the later if they have high-value home furnishings.
The limit for CEA ALE or loss of use coverage can range from $1,500 to $25,000 or a policyholder can purchase coverage equal to a percentage of the insured limit on the home. If you don’t live in the insured dwelling, or have a place to stay, you might not need this coverage.
Earthquake vs. Other Insurance in CA
Most personal condo unit, townhouse, and common-interest homeowners policies do not cover earthquake damage. Condo association master earthquake policies usually cover only the exterior and do not cover damage to personal belongings or damage inside individual units, so owners should consider if they need earthquake insurance. Mobile home insurance policies do not typically include earthquake coverage either. Earthquake insurance for both circumstances functions similarly to that of a fixed, stand alone home.
For renters, most insurance companies offer earthquake coverage as a purchasable option with your renters insurance. Earthquake insurance for renters covers the cost of repairing and replacing electronics, furniture and other items, living expenses and loss of use and emergency repairs such as cleaning and removing broken glass. In California, all of the coverage plans have a flat deductible of $750, no matter the limit of coverage you purchase.
Companies Participating in the CEA
Residents don’t purchase insurance through the CEA directly. Instead, policies are obtained through the CEA’s member insurance companies. Through its members, the CEA has claim-paying ability exceeding $10 billion. Participating insurers include some of the major providers in the homeowners and auto insurance market, like State Farm, Allstate, to USAA.
|ACA Insurance (AAA)|
|Farmers Insurance Group|
|Armed Forces Insurance Exchange|
|Liberty Mutual Insurance|
|Automobile Club of Southern California (AAA)|
|California FAIR Plan|
CSAA-AAA Northern California
|State Farm Insurance|