Earthquakes Are a Fact of Life in California
Earthquakes will happen, but we do not know exactly when. We do know that they can cause a lot of damage to your home and your belongings. You may even have to move out of your home while it is repaired or rebuilt.
Homeowners, renters, and condominium insurance policies do not cover damage from natural disasters such as earthquakes, floods, and landslides.
Earthquake insurance can help pay for some of your losses. This brochure will tell you about earthquake insurance.
Before You Buy Earthquake Insurance
Earthquake insurance covers some of the losses and damage that earthquakes can cause to your home, belongings, and other buildings on your property.
If you have a mortgage, you must have homeowners insurance. But you do not have to buy earthquake insurance.
Your homeowners insurance does not cover earthquake damage (except fire—see page 7).
I have homeowners insurance. How can I get earthquake insurance?
If you have homeowners insurance in California, your company must offer to sell you earthquake insurance. It must offer this every other year.
The offer must be in writing. It must tell you the amounts it covers (the limits), the deductible, and the premium.
You have 30 days to accept the offer. The 30-day period starts the date the company mails the offer to you. If you do not reply, you are rejecting the offer.
Does earthquake insurance cover all damage from earthquakes?
No. There are limits on what earthquake insurance pays. The purpose of earthquake insurance is to help put a roof back over your head. It does not replace everything you lost.
What if I rent?
You can buy earthquake insurance to cover damage to your belongings and to pay for living somewhere else while your rented home is being repaired.
What if I have a condo?
You can buy earthquake insurance to cover damage to your belongings. It can also pay for living somewhere else while your condo is being repaired. You may also need insurance to help pay for your condo association assessment to repair your building. Talk to your condo association.
What if I have a mobile home?
You can buy earthquake insurance to cover damage to your home and belongings. It can also pay for living somewhere else while your mobile home is being repaired.
The California Earthquake Authority (CEA)
The California Earthquake Authority (CEA) provides most earthquake insurance in California. CEA offers earthquake policies, for homeowners, mobilehome owners, condo unit owners and renters. You cannot buy earthquake insurance directly from CEA you buy it directly from insurance companies that are members of CEA.
You must have a residential property insurance policy in place in order to get a CEA earthquake policy. You must purchase your CEA policy from the same insurance company that you have your residential policy with-see the list of CEA participating insurers here.
Visit the CEA website at www.earthquakeauthority.com for more information.
Basic Earthquake Insurance
The (3) main parts of the basic earthquake coverage offered by the California Earthquake Authority (CEA).
Part 1: Your dwelling coverage. This is sometimes referred to as Coverage A and covers your home up to a certain amount, called the limit.
The limit on your earthquake insurance is the same as the limit on your homeowners insurance (dwelling coverage).
CEA offers deductibles of 5%, 10%, 15%, 20%, and 25%, with two exceptions:
If a home is valued at over $1 million dollars; and/or
If the home was built before 1980 on a raised or other* (non-slab) type foundation and is not verified to have been seismically retrofitted.
In both these cases, the lowest available deductible will be 15% (State law only requires that insurers offer a 15% deductible).
As with most earthquake policies, CEA insurance does not cover landscaping, pools, fences, masonry, or separate buildings.
If you rent from someone else or own a condo, you do not need this coverage.
Part 2: Your personal property coverage. This is sometimes referred to as Coverage C and covers things in your home, like furniture, TVs, and computers.
The limit starts at $5,000 and you can increase the limit to $25,000.
Part 3: Additional living expenses (ALE) or loss of use. This is sometimes referred to as Coverage D and covers temporary and extra costs to live somewhere else while your area is evacuated or your home is repaired.
It can cover temporary rental of a home, apartment, or hotel room; restaurant meals; a temporary telephone line; moving and storage; furniture rental; and laundry.
It is bound to a reasonable time needed to repair the home, or for you to move to another permanent home.
The limit range from $1,500 to $100,000.
This coverage never has a deductible under CEA
*An “other” type foundation is any foundation that is not entirely slab foundation or entirely raised foundation, or has more than one foundation type.
Homeowners Choice Policies
The CEA Homeowners Choice policy offers the option of choosing separate coverage for dwellings and personal property, with different deductibles. Even though you can select separate deductibles for dwelling and personal property, the Homeowners Choice policy will not apply both deductibles for the same earthquake claim. This means that CEA waives the personal property deductible if covered damage to your house exceeds the dwelling deductible.
Loss Assessment for Condo Unit Owners
If you are a condo unit owner, your HOA may have insurance for common areas and the exterior structure of the building; however, it may not cover earthquake damage to those common areas and exterior structures. Additionally, your association may require you and other unit owners to share repair costs or pay part of their policy deductible through an assessment. CEA condo unit policies provide up to $100,000 for your share fo certain assessments if your association imposes an assessment for covered damage caused by an earthquake.
Additional Coverage
You may be able to buy building code upgrade coverage (now up to $30,000). CEA homeowners policies include the first $1,500 for emergency repairs with no deductible.
Stand-alone or Monoline Policies
These are not CEA policies. A few companies offer these policies. They are policies that you can buy without buying homeowners insurance from the same company.
How do earthquake insurance premiums vary?
Your premium depends on many things, such as the location of your home, the cost to rebuild, type of construction, the coverages selected and the deductible. With CEA insurance, older homes may qualify for a discount of up 25 percent if they have been properly retrofitted.
What Earthquake Insurance Does Not Cover
All insurance policies have exclusions. These are the things the policy does not cover. Read your policy to learn about your exclusions.
Common Earthquake Insurance Exclusions
Common exclusions in earthquake insurance policies include:
Fire
Earthquake insurance usually does not cover anything that your homeowners policy already covers. For example, your homeowners policy covers fire damage, even if an earthquake causes the fire. Therefore, your earthquake policy does not cover fire damage.
Land
Usually, earthquake insurance does not cover damage to your land, such as sinkholes from erosion or other hidden openings under your land. You may be able to buy limited additional coverage to restore or stabilize land.
Vehicles
Earthquake insurance does not cover damage to your vehicles. Check your auto insurance policy to find out if it covers that damage.
Flood
Earthquake insurance does not cover water damage from outside your home, such as sewer or drain back-up, flood, or tsunami. For example, if you live near a lake that floods your home after an earthquake, earthquake insurance will not pay to repair the damage. A flood insurance policy will cover you.
Does my homeowners or renters insurance cover any earthquake damage?
In general, your homeowners or renters insurance does not protect your house from the damage an earthquake causes, even if the damage is indirect.
The main exception is fire. See below.
In some cases your homeowners or renters insurance may specifically cover direct loss due to explosion, theft, or breaking glass caused by an earthquake, even if you do not have earthquake insurance. Ask your insurance agent.
Read your homeowners policy and contact your insurance company whenever an earthquake damages your property. Do not assume that the damage is not covered.
Homeowners Insurance Covers Fire Damage
California law says that both homeowners and renters insurance must cover fire damage that is caused by or follows an earthquake.
This means that the fire damage is covered, whether or not you have earthquake insurance.
Earthquake Retrofitting
Retrofitting is making changes to increase the safety and strength of your home. This can help you save money on insurance and repairs.
The cost of earthquake insurance is based on a number of things, such as the way the home is made and the kind of soil under it. The cost is usually higher for:
Older homes.
Homes built of brick or masonry.
Homes that have more than one story.
Homes that are on sandy soil instead of clay or rock.
Homes that are not up to code.