In September 1996, the state Legislature established the California Earthquake Authority. The CEA is a privately funded, publicly managed organization that provides residential earthquake insurance to Californians. Designed to make quake insurance both available for consumers and financially viable for both insurers and their customers, the CEA is funded by insurance industry capital contributions and commitments, reinsurance and capital market borrowing. As of January 2010, the CEA had more than $9 billion in claims-paying capacity.
State law requires an insurer selling homeowner insurance to offer earthquake coverage. Insurers who choose not to participate in the CEA must offer their own earthquake coverage to their homeowner policyholders. As of January 2010, the CEA had about 800,000 policies in force and 17 participating insurers:
| ACA Insurance |
Farmers Insurance Group |
| Allstate Insurance |
Foremost |
| Armed Forces Insurance Exchange |
Golden Eagle |
| Auto Club of Southern California |
Homesite Insurance of California |
| California FAIR Plan |
Liberty Mutual |
| California State Automobile Association |
Mercury |
| Commerce West |
Safeco |
| Encompass Insurance |
State Farm |
| |
USAA |
The earthquake policy offered by the CEA was created by the state Legislature, and is generally regarded as the industry standard. The base policy carries a 15 percent deductible and covers the dwelling but not other structures such as swimming pools and detached garages. The policy has a $5,000 limit on contents coverage and a limit of $1,500 coverage for loss of use and additional living expenses. The policy also includes $10,000 in coverage to stabilize land, $10,000 for building code upgrades and 5 percent of the home’s insured value for emergency repairs after an earthquake.
Consumers also have the option to purchase additional coverage, lower their deductible to 10 percent, increase their contents coverage up to $100,000 and increase additional living expenses up to $15,000 and purchase an additional $10,000 in building code upgrade coverage.
For additional information on the CEA, visit its Web site at www.earthquakeauthority.com or call the CEA toll-free at (877) 797-4300.
