Earthquake FAQ's

Should I buy earthquake insurance? It depends on a number of factors including your income, your asset level, and how well you could withstand a major financial loss. It may also depend on where you live, since some areas of California are more prone to earthquakes.

How expensive is earthquake insurance? Premiums vary widely from carrier to carrier depending on a number of rating factors. However, the premium should not be the only consideration when purchasing a policy. Often, you can find policies with low premiums but the coverage may not adequately meet your needs.

How much earthquake insurance do I need? You need enough earthquake insurance to pay for the rebuilding or repair cost of your home. You should review the replacement cost of your home on an annual basis and make adjustments whenever you have made improvements to the dwelling. Following an earthquake, the costs to replace or repair damage may escalate since the demand for labor and materials typically increase following a disaster. If you are unsure, contact one of our specialists to assist you in determining the appropriate coverage.

What is a deductible? The deductible is the portion of the claim that you are responsible for before the carrier starts to pay. Although deductibles vary by contract, most residential policies offer 10% or 15% deductibles. Deductibles can apply to each individual coverage such as dwelling, personal property or to the combined amount of coverage.

What is retrofitting? Retrofitting is the process of bringing older homes up to modern standards of earthquake preparedness. Homes built prior to 1960 generally need to be retrofitted so that they can withstand the shock of an earthquake without sustaining major damage. In most cases, older homes are more expensive to insure against earthquake than newer homes.

Why does it matter where my home is located? The location of your home may determine the risk you face in the event of an earthquake. For example, if your home is built on a steep slope you are more likely to sustain damage from sliding during an earthquake. An addition, there are a number of major earthquake faults in California, and your proximity to those faults may increase the severity of loss in the event of an earthquake.

What is the CEA? The California Earthquake Authority (CEA) is a privately owned but publicly managed insurance company unaffiliated with the California Department of Insurance. The CEA was created by the California State Legislature in 1996 in response to the critical problems that arose after the Northridge Earthquake of 1994. Its primary focus was to allow insurers to continue providing earthquake insurance at a time when most insurance carriers were withdrawing from the market. In many cases, however, this meant higher premiums and fewer benefits. If your residence is insured by an insurance company that is a member of the CEA, then the earthquake insurance offered by your insurer is a CEA policy.