After the recent Ridgecrest, California earthquakes, there has been a lot of buzz about “the big one” coming and how that will affect Southern Californian residents’ Earthquake Insurance rates. Whether you already have Earthquake Insurance coverage on your Homeowners policy or if you are looking to add it now, you should know that rates are predicted to change significantly.
Below we explain what Earthquake Insurance does and does not cover, as well as why rates are changing for this type of optional coverage.
Earthquake Insurance is offered by the California Earthquake Authority (CEA) through your insurance company as an addition to your standard Homeowners Insurance. You cannot buy Earthquake Insurance directly from the CEA. A few insurance companies offer stand-alone policies, but the majority of coverage is written through the CEA.
In California, your insurance company is required to offer you Earthquake Insurance every other year, in writing. This document must include the policy limits, deductible and premium of the coverage being offered. You have 30 days to accept the offer from your insurer. No reply during the 30-day period is considered a rejection of coverage.
The Ridgecrest earthquakes have worried many residents across California. To disparage any false claims or misinformation, CEA CEO Glenn Pomeroy made a statement regarding new CEA policies:
“CEA policies can be purchased anywhere in California, at any time, and by anyone who has a home insurance policy with one of our participating insurers. However, for new policies purchased after an event, we do not provide coverage for the next 360 hours, or 15 days, for earthquakes that are seismically related to the initial event.”
This statement was made after concerns that insurance companies were confusing the 15-day waiting period after a seismic event with an outright moratorium in which existing residential policyholders could not purchase a CEA policy. California Insurance Commissioner Ricardo Lara also made a statement:
“If you do not have earthquake insurance, now is the time to look into getting it. A standard homeowners’ policy will not cover earthquake damage. Without specific earthquake coverage, you are responsible for all costs to repair, rebuild or replace your home and personal property.”
There are certain things that your CEA Earthquake Insurance policy does not cover, including damage caused by fire or damages to your land. However, these are typically already covered by your Homeowners Insurance. Earthquake Insurance also does not cover damages to your vehicle(s) or flood damage to your home. Your Auto Insurance policy protects you from earthquake damage if you have Comprehensive Insurance coverage on your policy. To protect your home against flooding, consider adding Flood Insurance to your Homeowners policy.
A renter, condo owner or mobile home owner can also obtain Earthquake Insurance.
Your premium is determined by many factors, including:
The CEA has an Earthquake Insurance premium calculator that you can find here.
Many residents are experiencing a change in their Earthquake Insurance rate, but it’s not because of the recent Ridgecrest earthquakes. It’s actually due to the latest scientific evidence about where powerful earthquakes are likely to strike next in the state.
The Uniform California Earthquake Rupture Forecast (UCERF3) predicts that a magnitude-8 earthquake or stronger is likely going to strike within the next 30 years. These findings are now being rolled into Earthquake Insurance rates, causing the premium changes across California.
In California, it’s a smart idea to have Earthquake Insurance, especially if you live close to a fault line. The CEA reports over 15,700 known fault lines in California and more are frequently being discovered by scientists. Additionally, most California residents live within 30 miles of an active fault line. As mentioned before, if you choose not to carry Earthquake coverage, you are responsible to pay for all repairs and damages to your home and personal property on your own.
You may think that getting covered is too expensive. But, will you be able to afford to repair or rebuild your home after a big earthquake without any financial help? Remember, you will have to continue paying your mortgage and taxes while you rebuild, too.
You can use the premium calculator linked above to calculate the cost of Earthquake Insurance for your situation, or you can call an Insurance Specialist at (855) 247-5298. Our agents can help you understand your rate and coverage. They can also further explain the benefits of carrying Earthquake Insurance on your policy, so call AIS today.
The information in this article is obtained from various sources. This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here. Such policy will be governed by the language contained therein, and no warranty or appropriateness for a specific purpose is expressed or implied.
