Natural disasters such as earthquakes, floods, and landslides are not covered by homeowner's insurance, renter's insurance, or condominium insurance.
Earthquake insurance can assist in covering a portion of your losses. This brochure provides information on earthquake insurance.
Before Buying the Earthquake Insurance
Before you buy earthquake insurance you need to know the following:
Some of the losses and damages that earthquakes can cause to your home, belongings, and other structures on your property are covered by earthquake insurance.
If you have a mortgage, you are required to obtain homeowner's insurance.
Your homeowner's insurance policy does not cover earthquake-related damages.
I have home owners insurance. How do I get earthquake coverage?
If you have homeowners insurance, your insurer must offer you earthquake insurance. This must be provided every other year.
Offers must be made in writing. It must disclose the covered amounts (limits), the deductible, and the premium.
You have thirty days to accept the proposal. The 30-day period commences on the date the company mails you the offer. By not responding, you are rejecting the offer.
Does earthquake insurance cover all earthquake-related damages?
No. There are restrictions on what earthquake insurance will cover. The purpose of earthquake insurance is to put a roof over your head after a disaster. It does not compensate for every loss.
What if I decide to rent?
You can purchase earthquake insurance to cover property damage and living expenses incurred while your rented home is being repaired.
What if I own a condominium?
You can purchase earthquake insurance California to protect your possessions. It may also cover the cost of living elsewhere while your condo is being repaired. You may also need insurance to cover your condo association's assessment for building repairs. Consult your condominium association.
What if I own a mobile home?
You can purchase California earthquake insurance to protect your home and possessions. Additionally, it can cover the cost of living elsewhere while your mobile home is being repaired.
The majority of earthquake insurance in California is provided by the California Earthquake Authority (CEA). CEA provides earthquake insurance to homeowners, mobile home owners, condo unit owners, and renters. You cannot purchase earthquake insurance directly from CEA; you must purchase it from member insurance companies.
A residential property insurance policy is required to purchase a CEA earthquake policy. You must purchase your CEA policy from the same insurer as your homeowner's policy; the list of CEA participating insurers is available here.
Basic Earthquake Insurance
The three primary components as per California Earthquake Authority's basic earthquake coverage (CEA).
1.Your homeowner's insurance.
This is sometimes referred to as Coverage A, and it protects your home up to a specified limit.
Your earthquake insurance limit is the same as your homeowner's insurance limit (dwelling coverage).
CEA offers 5%, 10%, 15%, 20%, and 25% deductibles. You are not required to pay your CEA deductible in advance in order to receive a claim check; it is simply the amount deducted from the total amount of covered losses.
As with the majority of earthquake insurance policies, CEA insurance does not cover landscaping, pools, fences, masonry, or individual structures.
Exterior masonry veneer is not covered by your CEA policy unless you add this coverage.
This coverage is unnecessary if you rent from another party or own a condominium.
2.Your personal property coverage
This may also be referred to as Coverage C, and it protects your furniture, televisions, and computers.
The minimum limit is $5,000, and the maximum limit is $200,000.
If you purchase optional coverage for breakables, and your china crystal are protected.
3.Additional living expenses (ALE) or the loss of use
This is sometimes referred to as Coverage D and pays for temporary and additional living expenses while your home is being repaired or your neighbourhood is evacuated.
It can cover temporary rental of an apartment, home, or hotel room; restaurant meals; moving and storage; a temporary telephone line; furniture rental; and laundry.
The range is between $1,500 and $100,000.
CEA does not impose a deductible on this coverage.
Homeowners Choice Policies
The CEA Homeowners Choice policy allows the policyholders to select separate coverage for dwellings and personal property according to their will, with varying deductibles. Even though separate deductibles can be selected for the dwelling and personal property, the Homeowners Choice policy would not apply both deductibles to a single earthquake claim. This means that CEA waives the personal property deductible if the dwelling deductible is exceeded by covered property damage.
Assessment of Loss for Condo Unit Owners
If you are a condo unit owner, your HOA may have insurance for the building's common areas and exterior structure, but it may not cover earthquake damage to these areas and structures. In addition, your association may require you as well as other unit owners to share repair costs or contribute a portion of their policy deductible through an assessment. CEA condo unit policies provide up to $100,000 for your share of certain assessments if your association assesses you for earthquake-related damage.
Additional Insurance Policy Coverage
You may be able to purchase coverage for building code upgrades (now up to $30,000). There is no deductible for the first $1,500 of emergency repairs covered by a CEA homeowners policy.
Stand-alone or Monoline Policies
This is not a CEA policy. Few businesses provide these policies. These are policies that can be purchased independently of homeowners insurance.
How do premiums for earthquake insurance vary?
Numerous factors, including the location of your home, the cost to rebuild, the type of construction, the coverages selected, and the deductible, affect your earthquake insurance premium. With CEA insurance, older homes that have been properly retrofitted may be eligible for a 20 percent discount.
Common Earthquake Insurance Exclusions
All the insurance policies have exclusions. These are the items not covered by the policy. Learn your exclusions by reading your policy.
Common earthquake insurance policy exclusions include:
Fire
Typically, earthquake insurance california does not cover what your homeowner's policy already covers. For instance, your homeowners insurance will cover fire damage, even if an earthquake caused it. Consequently, your earthquake policy does not cover damage caused by fire.
Land
Typically, earthquake insurance does not cover damage to your land, like sinkholes caused by erosion or other subterranean openings. You may be able to purchase limited additional coverage for land restoration or stabilization.
Vehicles
Your vehicle is not covered by earthquake insurance. Check your auto insurance policy to see if the damage is covered.
Flood
Water damage from outside your home, such as sewer or drain backup, flood, or tsunami, is not covered by earthquake insurance. For instance, if you live near a lake that floods your home after a quake, your earthquake insurance will not cover the repairs. A flood insurance policy will provide coverage for the damages.
Do my homeowner's or renter's insurance policies cover earthquake damage?
In general, your homeowner's or renter's insurance does not cover the damage caused by an earthquake, even if it is indirect.
• Fire is the main exception.
• In some instances, even if you do not have California earthquake insurance, your homeowner's insurance or renter's insurance may cover direct loss due to explosion, theft, or broken glass caused by an earthquake. You can ask the details to your insurance agent.
• Review your homeowner's insurance policy and contact your insurance provider whenever an earthquake causes property damage. Do not assume that the loss will not be covered.
Homeowners' Insurance Protects Against Fire Damage
According to California law, both homeowner's and renter's insurance must cover fire damage caused by or resulting from an earthquake.
This means that fire damage is covered regardless of whether or not the policyholder has earthquake insurance.
Earthquake Retrofitting
Retrofitting is the process of modifying your home to increase its safety and durability. This can reduce your insurance and repair costs.
The cost of earthquake insurance depends on a variety of factors, including the construction of the home and the type of soil beneath it. Typically, the price is higher for:
• Older homes
• Residences made of brick or masonry
• Residences with multiple stories
• Homes built on sandy soil as opposed to clay or rock.
• Homes that do not adhere to building codes.
What if my home does not comply with building codes?
Even if your property does not comply with current Building Code and Health and Safety Code rules regarding bolting foundations and anchoring water heaters, your insurer must offer you earthquake insurance. However, you might incur a higher premium and/or deductible.
There may be a discount for retrofitting
You might be able to reduce your premium or deductible if you retrofit your home to make it safer and more durable. These discounts must be communicated to you in writing by your insurance provider. Retrofitting can reduce earthquake damage, reduce insurance premiums, and bring a home up to code.
How can I retrofit my home?
Here are some methods for retrofitting.
• Fasten your residence to the foundation.
• Support the chimney.
• Support the water heater against a wall.
• Installation of automatic gas shutoff valves
• Use plywood to reinforce crumbling walls. View the image below:
Building Code Upgrade Coverage
The additional insurance, known as building code upgrade coverage, costs $10,000. The coverage covers only the building code upgrades required to obtain a building permit.
How to File an Earthquake Damage Claim
Immediately notify your insurance provider if you detect or suspect damage.
You can file claims via telephone.
When your insurance company receives your claim report, it must initiate a claim.
Immediately contact the California Department of Insurance if your insurance provider refuses to open a claim.
Insist that a claims adjuster be assigned to your case. This individual is qualified to evaluate the damage to your property.
Set a date and time for the claim adjuster to inspect the damage as soon as possible.
Demonstrate to the claims adjuster the extent of the damage.
Ensure that they inspect the concealed areas of your home, such as the basement, crawl space, slabs, and raised foundations.
If you find additional damage after the initial inspection, you should notify the claims adjuster and request a second inspection.
The House inspection is very important
It can be difficult to assess the extent of earthquake damage. Some types of damage are initially difficult to identify. You and the claims inspector must examine the claim thoroughly. Ensure that all visible damage is included in your claim, as well as any potential hidden damage.
Tips:
Telephone
Note every call you make to your insurance company.
• The name and title or designation of the person with whom you spoke.
• The time and date of the call.
• What you discussed.
• What the individual predicted would occur next.
Do not wait to file your claim
Claims that are not reported within one year can be denied by an insurance company. The year begins with a date known as the onset of the loss. This is the time when you:
• Observed property damage,
• You should have noticed it if you had thoroughly inspected your home for earthquake damage.
Your Claims Payment
If your claim exceeds your deductible, the insurance company will deduct the deductible from its payment to you. You do not need to incur any expenses before receiving payment.
Should I Buy Earthquake Insurance?
The following questions can help you decide whether to purchase earthquake insurance for your family.
Can I afford an earthquake policy?
You can calculate earthquake insurance from www.earthquakeauthority.com to estimate your premium
Do I live in an area prone to earthquakes?
It is better to conduct research on nearby fault lines, seismic zones levels as well as local soil conditions. Search for fault lines on the website of the United States Geological Survey at https://earthquake.usgs.gov.
Do I reside in a high-risk home?
A house is more likely to be damaged if it is older, constructed of brick or stone, or has multiple stories.
Can I afford to be without earthquake insurance?
Could you afford to repair or rebuild your home after a major quake? Can you continue to make your mortgage and tax payments while you rebuild?
Will the government assist me following a major earthquake?
Maybe. Low-interest loans are the primary form of federal disaster aid. You must demonstrate your finance ability to repay the loan. Federal Emergency Management Agency (FEMA) grants for emergency home repairs as well as temporary rent assistance are restricted to individuals who do not qualify for loans.
I am unable to purchase earthquake insurance. What other measures can I take to protect my home?
There are numerous measures you can take to protect your home from earthquake damage. Whether or not you purchase earthquake insurance, you should protect your home, your belongings, and your family.
• Renovate as much as possible.
• Secure fragile objects with museum putt
• Attach locks to china cabinets.
• Fasten tall furniture, such as bookcases and armories, to the wall studs.
• Secure computers and televisions.
• Visit your local hardware store in search of latches, putty, computer straps, and other protective devices.
Do not wait until the earthquake has occurred
Buying insurance after a quake has occurred is not a good idea. It offers no protection against the damage you have already sustained. In addition, after an earthquake, insurance companies frequently refrain from selling earthquake coverage for a period of time. When they begin selling it again, the premiums could be higher.
Why don't people purchase earthquake insurance?
There are several reasons why Americans do not purchase earthquake insurance. The first is that many believe the cost is disproportionate to their perceived risk. Additionally, limited coverage is a deterrent to purchasing the insurance. Thirdly, there is a general lack of education regarding what is covered by an earthquake insurance policy and what will occur after an event. Many people believe the federal government will cover the entire cost of disaster recovery, despite the fact that this is not the case.
The California Earthquake Authority
California is arguably the most well-known state for its earthquake risk, despite Alaska's significant seismic activity. A recent US Geological Survey estimates that Southern California (the Los Angeles area) has a 31% chance of experiencing a magnitude-7.5 earthquake level within the next 30 years. This potentially massive earthquake has been officially dubbed "The Big One." Its name haunts media outlets across the United States with terrifying previews of the devastation a catastrophe of this magnitude could cause.
California has experienced a major earthquake before. The magnitude 6.8 Northridge earthquake had caused an estimated $25.6 billion in insured losses in January 1994. According to the Insurance Information Institute, the insurance industry paid out more in claims for the Northridge earthquake than it collected in earthquake premiums in the thirty years prior. As a result, several insurers came dangerously close to insolvency. After this, a number of insurance companies began to limit their exposure to earthquakes in the state, as well as significantly increase their premiums and deductibles. The majority of homeowners were then unable to afford earthquake insurance, and a serious protection gap emerged in the state.
In 1996, Californian legislators established the California Earthquake Authority (CEA), a publicly managed entity tasked with providing earthquake insurance to California homeowners. It is now the largest earthquake insurance provider in the United States.
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