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Earthquake Insurance (California)
This portion of website is taken of CEA site with permission in order to
inform potential clients.
Homeowner
The CEA homeowners policy is designed to help get you back into your home
after an earthquake. The CEA base-limits policy for homeowners includes:
Dwelling coverage - The coverage limit is the insured value of your home
stated on your companion homeowner policy.
Personal Property coverage - $5,000
Additional Living Expense/Loss of Use coverage - $1,500
You may select either a 10% or 15% deductible on your Dwelling coverage, and
CEA’s increased-limit options allow you to increase Personal Property
coverage to as much as $100,000 and Additional Living Expense/Loss of Use
coverage to as much as $15,000.
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Personal
Property Coverage (Coverage C)
Personal Property coverage protects many items in the typical home,
including furniture, TVs, audio and video equipment, household appliances,
bedding, and clothing.
A base policy provides up to $5,000 to replace personal property, but you
can increase your Personal Property coverage to as much as $100,000.
Dwelling Coverage (Coverage A)
Dwelling coverage helps protect the investment you have made in your home.
It will help pay to repair or, (up to the policy limit) replace, an insured
home when structural damage exceeds the policy deductible. You may select a
10% or 15% deductible for your Dwelling coverage.
The insured value of your home, as stated on the declarations page of your
companion homeowners insurance policy, determines the Dwelling-coverage
limit of your CEA earthquake policy. If your home's insured value changes in
your homeowners policy, the insured value for your earthquake coverage will
change, too, and that will affect your earthquake-policy premium.
Personal Property Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2 Option
3 Option
4
$5,000 $25,000 $50,000 $75,000 $100,000
Additional Living Expense/Loss of Use Coverage (Coverage D)
If damage from an earthquake prevents you from living in your home, your CEA
policy may pay for necessary increases in living expenses you incur to
maintain your normal standard of living.
CEA Additional Living Expense/Loss of Use coverage on a property you own and
rent to tenants can help protect your rental income, to the limit of that
coverage.
A base policy provides $1,500 of Additional Living Expense coverage or you
can increase that coverage to as much as $15,000.
Additional Living Expense Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2
$1,500 $10,000 $15,000
Additional Coverages
Limited Building Code Upgrade
In most California communities, repairing or rebuilding a home after an
earthquake must be done according to current building codes. In addition to
providing funds for repairing or replacing your home, the CEA base policy
includes an additional $10,000 in Building Code Upgrade coverage.
Option to Increase Building Code Upgrade Coverage
For policies that renew or become effective on or after July 1, 2006,
homeowners can choose to increase Building Code Upgrade coverage by an
additional $10,000, for a total Building Code Upgrade coverage limit of
$20,000.
Items Not Covered
Dwelling-Related Items
Your CEA policy excludes some items from dwelling coverage. A partial list
of items that are not covered includes:
Detached garages and most other structures that are not part of the dwelling
Land damage (other than $10,000 in coverage for land stabilization)
Swimming pools and spas
Awnings and patio coverings
Fences, landscaping, and irrigation systems
Antennas and satellite dishes
Patios and decks
Walkways and driveways not needed for pedestrian or disabled access to your
home
Certain decorative or artistic items such as mirrors, chandeliers, stained
glass, or mosaics
Personal Property
A partial list of personal property items not covered by your CEA policy
includes:
Animals, birds, or fish
Artwork, photographs, and ceramics
Motor vehicles (such as cars, trucks, and motorcycles), riding lawn mowers,
trailers, golf carts, and watercraft
Glassware, crystal, porcelain, and china
Spas and hot tubs
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Coverage Sublimits
Sublimits - Dwelling Coverage
Once damage to your dwelling has exceeded your CEA policy’s deductible, the
policy covers reasonable emergency repairs in an amount up to 5% of the
insured value of the home as part of the dwelling limit of insurance.
As part of the dwelling limit of insurance, your CEA policy will pay up to
$10,000, including engineering costs, to replace, rebuild, stabilize, or
otherwise restore land you own that is necessary to support your home. The
policy does not provide any other coverage for land.
If your dwelling has one or more chimneys damaged by an earthquake, your CEA
policy includes a single sublimit of $5,000 to repair or replace all
dwelling chimneys.
Sublimits - Personal Property Coverage
Personal Property coverage sublimits include the following:
$1,000 for damage to electronic data-processing equipment such as computers
and printers
$250 for money, bank notes, coins, and medals
$300 for business property
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Deductibles
CEA earthquake insurance is intended to protect your assets in the event of
catastrophic loss—in order to receive benefits from your CEA earthquake
coverage, your claim must exceed set deductibles.
CEA policy deductibles are a calculation of the share of loss for which a
policyholder is responsible—it is not an amount of money a policyholder must
have or pay before receiving money from the CEA.
Deductible for Dwelling Coverage
If your dwelling sustains eligible earthquake damage in excess of the
deductible, you are eligible to a claim payment from the CEA. The deductible
amount is used to determine the amount of your claim payment.
The dwelling deductible is calculated as a percentage of the insured value
of the dwelling structure. The insured value is the amount of coverage your
insurer has specified as Coverage A: Dwelling in your homeowners insurance
policy—this amount can be found on the declarations page of your homeowners
insurance policy.
The CEA policy offers two deductible options: the standard base-limit
deductible of 15% or a 10% deductible option.
A CEA dwelling deductible is either 10% or 15% of the insured value of the
dwelling. This table illustrates how to calculate a CEA dwelling deductible,
using an insured value of $100,000. (In calculating your deductible, please
use your own dwelling's insured value, as stated on your CEA policy's
declarations page.)
Deductible
Selected by
the Policyholder x Insured Value of Dwelling = Amount of Deductible
Example 1 15% x $100,000 = $15,000
Example 2 10% x $100,000 = $10,000
Only covered damage to the dwelling counts toward meeting the deductible.
This means that, regardless of the amount of damage to your home's contents
(or "personal property"), structural earthquake damage to your dwelling must
exceed the deductible before a CEA policy would be available to pay any loss
to the dwelling or any loss to personal property. Certain other conditions
may apply to your loss—please read your policy carefully.
Once structural dwelling damage exceeds the deductible, the CEA will
authorize payment for the insured loss, up to the insured value of your
dwelling.
You do not have to pay the deductible before the CEA pays for earthquake
damage to your home—the deductible is only used to calculate the payable
portion of your claim; you don't have to make actual out-of-pocket
expenditures before you receive payments on your CEA claim.
How Deductibles Are Used to Determine Claim Payments
(All three Examples assume the policyholder has selected a base-limits
deductible of 15%, and the policyholder's dwelling has an insured value of
$100,000. The claims below are made only for damage to the dwelling.)
Amount of Eligible Dwelling
Damage
– Amount of Deductible = Dwelling Claim Payment
Example 1 $13,500 – $15,000 = $0
Damage to the dwelling did not exceed the deductible - the claim is not
eligible for payment.
Example 2 $45,000 – $15,000 = $30,000*
Example 3 $120,000 – $15,000 = $100,000*
Eligible for payment, but not more than the insured value of dwelling.
* Under the CEA base-limits policy, paid dwelling claims are eligible for up
to an additional $10,000 for building code upgrades.
Deductible for Personal Property Coverage
Damage to personal property is not covered unless the dwelling deductible is
met. If the dwelling deductible is met, no additional deductible applies for
your Personal Property coverage.
Deductible for Additional Living Expense/Loss of Use Coverage
There is no deductible for Additional Living Expense/Loss of Use coverage.
Eligible Structures
CEA homeowner policies are intended for individually-owned structures of one
to four dwelling units that are used exclusively for residential purposes.
The dwelling structure need not be owner-occupied, and only dwelling
structures in California are eligible for coverage—buildings used for any
commercial, industrial, or business purpose are not eligible for CEA
earthquake coverage.
Structures other than the eligible dwellings described above, including
detached garages, outbuildings and other structures, are not eligible for
CEA coverage.
Multiple Structures on One Property
The CEA will not cover more than one residential structure on one CEA
policy. If more than one dwelling is located on a property, the secondary
dwellings may be eligible for CEA coverage if written under separate
policies—talk to your homeowners insurance agent or company for details.
Rates & Premiums
How Rates are Determined
The CEA is required by law to use the best science available, and is
expressly permitted by law to use earthquake computer modeling, to establish
actuarially sound rates.
Identifying Seismic Risk
To determine seismic risk for an area, scientists and engineers at the
computer modeling firm under contract to the CEA incorporate data from a
variety of highly respected sources including the United States Geological
Survey (USGS) and the California Geological Survey. Criteria used to assess
seismic risk for CEA rating territories include location and proximity to
earthquake faults, other geological factors that may affect how structures
respond to earthquakes, and soil type.
Computer Modeling
Computer modeling uses scientific and engineering data and actuarial
techniques to calculate anticipated losses from earthquakes. Taking
characteristics of the CEA portfolio of earthquake-insurance policies, an
earthquake model simulates earthquakes of varying magnitudes, in various
locations throughout California. The CEA's policy inventory is the most
comprehensive database ever developed for earthquake ratemaking.
Modeling potential loss scenarios allows the CEA to calculate the
claim-paying capacity it must maintain and helps determine appropriate
earthquake-insurance rates. The CEA rating methodology is based on the best
available scientific, engineering, and actuarial expertise and has been
approved and accepted by the CEA Governing Board and the California
Department of Insurance.
Rating Territories
Based on scientifically modeled seismic risk, the CEA has established
actuarially sound “rating territories,” grouping together those ZIP Codes
that present reasonably similar seismic risk. Although the risk might not be
exactly the same for each ZIP Code in a rating territory, the risks are
similar enough to justify the territorial grouping. Policyholders who live
in rating territories close to an earthquake fault or have predominantly
poor soil can expect higher rates than those on firm soil or farther from
faults.
Age and Type of Construction
Age and type of construction contribute to how a residential structure
reacts during an earthquake. Based on the best available scientific and
engineering research, CEA premiums reflect the following rating factors:
Houses built on a slab perform better than those built on a raised
foundation.
One-story houses are less vulnerable to earthquake shaking than multi-story
houses.
Unreinforced masonry structures are more susceptible to damage than those of
wood-frame construction.
Houses of a certain age are not as strongly constructed as others.
How CEA Premiums are Calculated
Rating factors, like the location, age, and type of construction of your
home, determine your rate, but the amount and types of CEA coverage you
choose determine your premium, the amount you pay each year for your
earthquake policy. The factors listed below help to determine your premium.
Rating territory, determined by the ZIP Code of the insured property
Insured value (as stated on declarations page of the companion homeowners
insurance policy)
Construction type
Age of construction
Number of stories
Deductible selected (10% or 15%)
Whether or not optional Increased Building Code coverage (available for
policies effective or renewing on or after July 1, 2006) is selected
Amount of Personal Property coverage selected
Amount of Additional Living Expense/Loss of Use coverage selected
Note: Dwellings that have been retrofitted may be entitled to a 5% premium
discount.
Only a CEA participating insurance company or its agent can give you an
exact CEA-premium quote, but to get a good estimate of the cost, use our
handy premium calculator.
Retrofit Discount
The California Insurance Code states that CEA policyholders who have
retrofitted their homes to withstand earthquake shake damage according to
standards and to the extent set by the CEA Governing Board receive a 5%
premium discount.
The CEA applies a 5% premium discount to dwellings that meet the following
requirements: built before 1979, is of a wood-frame construction-type, the
frame is tied to the foundation, has cripple walls braced with plywood or
its equivalent, and the water heater is secured to the building frame. The
retrofit discount is not available for houses built on concrete-slab
foundations.
Mobile home
The CEA mobile home owners policy is designed to help get you back into your
home after an earthquake. The CEA base-limits policy for mobile home owners
includes:
Dwelling coverage - The coverage limit is the insured value of your
mobile home stated on your companion homeowner policy.
Personal Property coverage - $5,000
Additional Living Expense/Loss of Use coverage - $1,500
You may select either a 10% or 15% deductible on your Dwelling coverage, and
CEA’s increased-limit options allow you to increase Personal Property
coverage to as much as $100,000 and Additional Living Expense/Loss of Use
coverage to as much as $15,000.
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Coverage
Dwelling Coverage (Coverage A)
Dwelling coverage helps protect the investment you have made in your
mobile home. It will help pay to repair or, (up to the policy limit) replace,
an insured mobile home when structural damage exceeds the policy deductible.
You may select a 10% or 15% deductible for your Dwelling coverage.
The insured value of your mobile home, as stated on the declarations page of
your companion homeowners insurance policy, determines the Dwelling-coverage
limit of your CEA earthquake policy. If your mobile home's insured value
changes in your homeowners policy, the insured value for your earthquake
coverage will change, too, and that will affect your earthquake-policy
premium.
Personal Property Coverage (Coverage C)
Personal Property coverage protects many items in the typical home,
including furniture, TVs, audio and video equipment, household appliances,
bedding, and clothing.
A base policy provides up to $5,000 to replace personal property, but you
can increase your Personal Property coverage to as much as $100,000.
Personal Property Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2 Option
3 Option
4
$5,000 $25,000 $50,000 $75,000 $100,000
Additional Living Expense/Loss of Use Coverage (Coverage D)
If damage from an earthquake prevents you from living in your home, your CEA
policy may pay for necessary increases in living expenses you incur to
maintain your normal standard of living.
CEA Additional Living Expense/Loss of Use coverage on a property you own and
rent to tenants can help protect your rental income, to the limit of that
coverage.
A base policy provides $1,500 of Additional Living Expense coverage or you
can increase that coverage to as much as $15,000.
Additional Living Expense Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2
$1,500 $10,000 $15,000
Additional Coverages
Limited Building Code Upgrade
In most California communities, repairing or rebuilding a home after an
earthquake must be done according to current building codes. In addition to
providing funds for repairing or replacing your home, the CEA base policy
includes an additional $10,000 in Building Code Upgrade coverage.
Items Not Covered
Dwelling-Related Items
Your CEA policy excludes some items from dwelling coverage. A partial list
of items that are not covered includes:
Detached garages and most other structures that are not part of the dwelling
Land damage (other than $10,000 in coverage for land stabilization)
Swimming pools and spas
Awnings and patio coverings
Fences, landscaping, and irrigation systems
Antennas and satellite dishes
Patios and decks
Walkways and driveways not needed for pedestrian or disabled access to your
home
Certain decorative or artistic items such as mirrors, chandeliers, stained
glass, or mosaics
Personal Property
A partial list of personal property items not covered by your CEA policy
includes:
Animals, birds, or fish
Artwork, photographs, and ceramics
Motor vehicles (such as cars, trucks, and motorcycles), riding lawn mowers,
trailers, golf carts, and watercraft
Glassware, crystal, porcelain, and china
Spas and hot tubs
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Coverage Sublimits
Sublimits - Dwelling Coverage
Once damage to your dwelling has exceeded your CEA policy’s deductible, the
policy covers reasonable emergency repairs in an amount up to 5% of the
insured value of the home as part of the dwelling limit of insurance.
As part of the dwelling limit of insurance, your CEA policy will pay up to
$10,000, including engineering costs, to replace, rebuild, stabilize, or
otherwise restore land you own that is necessary to support your home. The
policy does not provide any other coverage for land.
Sublimits - Personal Property Coverage
Personal Property coverage sublimits include the following:
$1,000 for damage to electronic data-processing equipment such as computers
and printers
$250 for money, bank notes, coins, and medals
$300 for business property
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Deductibles
CEA earthquake insurance is intended to protect your assets in the event of
catastrophic loss—in order to receive benefits from your CEA earthquake
coverage, your claim must exceed set deductibles.
CEA policy deductibles are a calculation of the share of loss for which a
policyholder is responsible—it is not an amount of money a policyholder must
have or pay before receiving money from the CEA.
Deductible for Dwelling Coverage
If your dwelling sustains eligible earthquake damage in excess of the
deductible, you are eligible to a claim payment from the CEA. The deductible
amount is used to determine the amount of your claim payment.
The dwelling deductible is calculated as a percentage of the insured value
of the dwelling structure. The insured value is the amount of coverage your
insurer has specified as Coverage A: Dwelling in your homeowners insurance
policy—this amount can be found on the declarations page of your homeowners
insurance policy.
The CEA policy offers two deductible options: the standard base-limit
deductible of 15% or a 10% deductible option.
A CEA dwelling deductible is either 10% or 15% of the insured value of the
dwelling. This table illustrates how to calculate a CEA dwelling deductible,
using an insured value of $100,000. (In calculating your deductible, please
use your own dwelling's insured value, as stated on your CEA policy's
declarations page.)
Deductible
Selected by
the Policyholder x Insured Value of Dwelling = Amount of Deductible
Example 1 15% x $100,000 = $15,000
Example 2 10% x $100,000 = $10,000
Only covered damage to the dwelling counts toward meeting the deductible.
This means that, regardless of the amount of damage to your home's contents
(or "personal property"), structural earthquake damage to your dwelling must
exceed the deductible before a CEA policy would be available to pay any loss
to the dwelling or any loss to personal property. Certain other conditions
may apply to your loss—please read your policy carefully.
Once structural dwelling damage exceeds the deductible, the CEA will
authorize payment for the insured loss, up to the insured value of your
dwelling.
You do not have to pay the deductible before the CEA pays for earthquake
damage to your home—the deductible is only used to calculate the payable
portion of your claim; you don't have to make actual out-of-pocket
expenditures before you receive payments on your CEA claim.
How Deductibles Are Used to Determine Claim Payments
(All three Examples assume the policyholder has selected a base-limits
deductible of 15%, and the policyholder's dwelling has an insured value of
$100,000. The claims below are made only for damage to the dwelling.)
Amount of Eligible Dwelling
Damage
– Amount of Deductible = Dwelling Claim Payment
Example 1 $13,500 – $15,000 = $0
Damage to the dwelling did not exceed the deductible - the claim is not
eligible for payment.
Example 2 $45,000 – $15,000 = $30,000*
Example 3 $120,000 – $15,000 = $100,000*
Eligible for payment, but not more than the insured value of dwelling.
* Under the CEA base-limits policy, paid dwelling claims are eligible for up
to an additional $10,000 for building code upgrades.
Deductible for Personal Property Coverage
Damage to personal property is not covered unless the dwelling deductible is
met. If the dwelling deductible is met, no additional deductible applies for
your Personal Property coverage.
Deductible for Additional Living Expense/Loss of Use Coverage
There is no deductible for Additional Living Expense/Loss of Use coverage.
Rates & Premiums
How Rates are Determined
The CEA is required by law to use the best science available, and is
expressly permitted by law to use earthquake computer modeling, to establish
actuarially sound rates.
Identifying Seismic Risk
To determine seismic risk for an area, scientists and engineers at the
computer modeling firm under contract to the CEA incorporate data from a
variety of highly respected sources including the United States Geological
Survey (USGS) and the California Geological Survey. Criteria used to assess
seismic risk for CEA rating territories include location and proximity to
earthquake faults, other geological factors that may affect how structures
respond to earthquakes, and soil type.
Computer Modeling
Computer modeling uses scientific and engineering data and actuarial
techniques to calculate anticipated losses from earthquakes. Taking
characteristics of the CEA portfolio of earthquake-insurance policies, an
earthquake model simulates earthquakes of varying magnitudes, in various
locations throughout California. The CEA's policy inventory is the most
comprehensive database ever developed for earthquake ratemaking.
Modeling potential loss scenarios allows the CEA to calculate the
claim-paying capacity it must maintain and helps determine appropriate
earthquake-insurance rates. The CEA rating methodology is based on the best
available scientific, engineering, and actuarial expertise and has been
approved and accepted by the CEA Governing Board and the California
Department of Insurance.
Rating Territories
Based on scientifically modeled seismic risk, the CEA has established
actuarially sound “rating territories,” grouping together those ZIP Codes
that present reasonably similar seismic risk. Although the risk might not be
exactly the same for each ZIP Code in a rating territory, the risks are
similar enough to justify the territorial grouping. Policyholders who live
in rating territories close to an earthquake fault or have predominantly
poor soil can expect higher rates than those on firm soil or farther from
faults.
How CEA Premiums are Calculated
Rating factors, like the location of your residence, determine your rate,
but the amount and types of CEA coverage you choose determine your premium,
the amount you pay each year for your earthquake policy. The factors listed
below help to determine your premium.
Rating territory, determined by the ZIP Code of the insured mobile home's
location
Insured value (as stated on declarations page of the companion homeowners
insurance policy)
Deductible selected (10% or 15%)
Amount of Personal Property coverage selected
Amount of Additional Living Expense/Loss of Use coverage selected
Note: Mobile homes that have been retrofitted may be entitled to a 5% premium
discount.
Only a CEA participating insurance company or its agent can give you an
exact CEA-premium quote, but to get a good estimate of the cost, use our
handy premium calculator.
What Is a Modular Home versus a Mobile home or Manufactured Home?
Though built in sections at a factory, modular homes are built to conform to
all building codes at their destinations. They are generally placed on a
foundation, then joined and completed by a local builder.
Mobile homes (or manufactured homes) are built to quality-assurance standards
administered by the U.S. Department of Housing and Urban Development, rather
than to building codes at their destinations. Mobile homes are usually built
on a non-removable steel chassis. Building inspectors check the work done
locally (such as electrical hook-up) but are not required to approve the
structure.
The CEA rates modular homes in the same manner as site-built homes. CEA
participating insurance companies may rate a mobile home as a dwelling if the
mobile home is permanently attached to a foundation so that property taxes
are assessed.
Retrofit Discount
The California Insurance Code states that CEA policyholders who have
retrofitted their homes to withstand earthquake shake damage according to
standards and to the extent set by the CEA Governing Board receive a premium
discount.
The CEA applies a premium discount to mobile home policies if the mobile
home
is reinforced by an earthquake-resistant bracing system that is certified by
the California Department of Housing and Community Development.
The statewide average premium discount is 55%, however the exact discount
amount varies by residence location.
Condominium
The CEA condominium-owner policy (for individual condominiums, townhouses,
or other common-interest-development properties) is designed to help get you
back into your home after an earthquake. When you buy a CEA base-limits
condominium policy, you have the choice of three coverage options which may
be purchased separately or in combination. The following are the coverage
and limit options available:
Building Property - $25,000
Personal Property - $5,000; Additional Living Expense/Loss of Use - $1,500
Loss Assessment - $25,000, $50,000 or $75,000
CEA’s increased-limit options allow you to increase Personal Property
coverage to as much as $100,000 and Additional Living Expense/Loss of Use
coverage to as much as $15,000.
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Coverage
Building Property Coverage (Coverage A)
When damage exceeds the policy’s Building Property coverage deductible of
$3,750, this coverage provides up to $25,000 to repair and replace certain
interior elements and improvements and would also cover utility equipment
such as pipes and wiring for which you alone are responsible under your
homeowners association's governing documents.
The coverage does not pay to repair or replace parts of the condominium
development that are commonly-owned or are otherwise the responsibility of
your homeowners association.
Examples of covered interior elements and improvements are built-in
appliances, fixtures, and wall-to-wall carpeting.
When you purchase earthquake insurance for your condominium, you should
confirm which utility and similar equipment are your legal responsibility to
repair and maintain.
Personal Property Coverage (Coverage C)
Personal Property coverage protects many items in the typical home including
such items as furniture, TVs, audio and video equipment, household
appliances, bedding, and clothing.
If you choose Personal Property coverage, base coverage provides up to
$5,000 to replace personal property, but you can increase your coverage up
to as much as $100,000. By choosing to include Personal Property coverage in
your policy, you will automatically receive Additional Living Expense/Loss
of Use coverage of $1,500.
Personal Property Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2 Option
3 Option
4
$5,000 $25,000 $50,000 $75,000 $100,000
Additional Living Expense/Loss of Use Coverage (Coverage D)
If damage from an earthquake prevents you from living in your home, your CEA
policy may pay for necessary increases in living expenses you incur to
maintain your normal standard of living.
CEA Additional Living Expense/Loss of Use coverage on a property you own and
rent to tenants can help protect your rental income, to the limit of that
coverage.
You can purchase a base limit of $1,500 of Additional Living Expense
coverage or increase that coverage to as much as $15,000. If you choose to
include Additional Living Expense coverage as part of your policy, you will
automatically receive base Personal Property coverage of $5,000 as well.
Additional Living Expense Coverage: Increased-Limit Options
Base
Coverage Option
1 Option
2
$1,500 $10,000 $15,000
Loss Assessment Coverage (Coverage E)
In condominium communities, building exteriors, certain building components,
and common areas are typically owned by the homeowners association or by all
of the condominium owners as a group. In the event of earthquake damage to
such property, the association, in accordance with its governing documents,
may impose an assessment against members of the association to pay for
repairs. Loss Assessment coverage will help you pay your share of certain
assessments the association may impose.
If the fair market value of your condominium is greater than $135,000, you
can purchase $50,000 or $75,000 in Loss Assessment coverage; if the fair
market value is $135,000 or less, you can choose to purchase either $25,000,
$50,000 or $75,000 in coverage.
Additional Coverage
Limited Building Code Upgrade Coverage
In most California communities, repairing or rebuilding a home after an
earthquake must be done according to current building codes. In addition to
the $25,000 Building Property coverage limits, the Building Property
coverage provides an additional $10,000 in coverage for the cost of making
upgrades required by current building codes.
Items Not Covered
Building Property and Loss Assessment
Your policy excludes some items from your Building Property and Loss
Assessment coverage. A partial list of items that are not covered includes:
Detached garages and most other structures that are not part of the
commonly-owned dwelling structures
Land damage (other than $10,000 in coverage for land stabilization)
Swimming pools and spas
Awnings and patio coverings
Fences, landscaping, and irrigation systems
Antennas and satellite dishes
Decorative features
Personal Property
A partial list of personal property items not covered by your CEA policy
includes:
Animals, birds, or fish
Artwork, photographs, and ceramics
Motor vehicles (such as cars, trucks, and motorcycles), riding lawn mowers,
trailers, golf carts, and watercraft
Glassware, crystal, porcelain, and china
Spas and hot tubs
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Coverage Sublimits
Sublimits - Personal Property Coverage
Personal Property coverage sublimits include the following:
$1,000 for damage to electronic data-processing equipment such as computers
and printers
$250 for money, bank notes, coins, and medals
$300 for business property
Your CEA policy contains exclusions and special limits of coverage—read the
entire policy to become familiar with what is and is not covered. If you
still have questions about your CEA policy after reading the information on
our Web site, please contact your insurance agent or your homeowners
insurance company.
Deductibles
CEA earthquake insurance is intended to protect your assets in the event of
catastrophic loss—in order to receive benefits from your CEA earthquake
coverage, your claim must exceed set deductibles.
CEA policy deductibles are a calculation of the share of loss for which a
policyholder is responsible—it is not an amount of money a policyholder must
have or pay before receiving money from the CEA.
Deductible for Building Property Coverage
Building Property coverage provides up to $25,000 to repair or replace
interior structural components when damage exceeds the policy’s $3,750 (15%)
deductible.
Deductible for Personal Property Coverage
The deductible is $750, no matter what limit of Personal Property coverage
you select.
Deductible for Additional Living Expense/Loss of Use Coverage
There is no deductible for Additional Living Expense/Loss of Use coverage.
Deductible for Loss Assessment Coverage
Loss Assessment coverage has a deductible of 15% of the total Loss
Assessment coverage amount.
Rates & Premiums
How Rates are Determined
The CEA is required by law to use the best science available, and is
expressly permitted by law to use earthquake computer modeling, to establish
actuarially sound rates.
Identifying Seismic Risk
To determine seismic risk for an area, scientists and engineers at the
computer modeling firm under contract to the CEA incorporate data from a
variety of highly respected sources including the United States Geological
Survey (USGS) and the California Geological Survey. Criteria used to assess
seismic risk for CEA rating territories include location and proximity to
earthquake faults, other geological factors that may affect how structures
respond to earthquakes, and soil type.
Computer Modeling
Computer modeling uses scientific and engineering data and actuarial
techniques to calculate anticipated losses from earthquakes. Taking
characteristics of the CEA portfolio of earthquake-insurance policies, an
earthquake model simulates earthquakes of varying magnitudes, in various
locations throughout California. The CEA's policy inventory is the most
comprehensive database ever developed for earthquake ratemaking.
Modeling potential loss scenarios allows the CEA to calculate the
claim-paying capacity it must maintain and helps determine appropriate
earthquake-insurance rates. The CEA rating methodology is based on the best
available scientific, engineering, and actuarial expertise and has been
approved and accepted by the CEA Governing Board and the California
Department of Insurance.
Rating Territories
Based on scientifically modeled seismic risk, the CEA has established
actuarially sound “rating territories,” grouping together those ZIP Codes
that present reasonably similar seismic risk. Although the risk might not be
exactly the same for each ZIP Code in a rating territory, the risks are
similar enough to justify the territorial grouping. Policyholders who live
in rating territories close to an earthquake fault or have predominantly
poor soil can expect higher rates than those on firm soil or farther from
faults.
How CEA Premiums are Calculated
Rating factors, like the location of your residence, determine your rate,
but the amount and types of CEA coverage you choose determine your premium,
the amount you pay each year for your earthquake policy. The factors listed
below help to determine your premium.
Rating territory, determined by the ZIP Code of the insured property
Fair market value of the individual unit
Whether or not an HOA master policy of earthquake insurance exists
Whether or not Building Property coverage is selected
Amount of Personal Property coverage selected
Amount of Additional Living Expense/Loss of Use coverage selected
Amount of Loss Assessment coverage available or selected
Only a CEA participating insurance company or its agent can give you an
exact CEA-premium quote, but to get a good estimate of the cost, use our
handy premium calculator.
Has Your Homeowners Association Purchased a Master Policy for Earthquake?
A master policy of earthquake insurance, purchased by a condominium owner’s
homeowners association (HOA), may provide condominium owners with a
significant layer of protection from earthquake damage and loss. (Such
policies are considered commercial policies and are not available through
the CEA.) It is important for you to know if your HOA has a master policy of
earthquake insurance in place and, if it does, to become familiar with its
scope of coverage, exclusions, and deductibles.
If your condominium development suffers earthquake damage but your HOA has
no earthquake coverage, individual condominium owners might have to pay
assessments levied by the HOA to repair or rebuild condominium structures.
If an HOA master earthquake policy is in place, it still may have
deductibles for which owners of individual units can be assessed. But
because of the protection a master policy provides, your CEA
earthquake-insurance premium will be lower if you provide documentation that
your HOA has a master policy of earthquake insurance in force.
Retrofit Discount
Condominium owners and renters are not eligible for the CEA retrofit
discount.
Does My Homeowners Policy Cover Earthquakes?
Most standard homeowners, mobile home owners, condominium, and renters
insurance policies do not cover earthquake damage. Similar to flood
insurance, earthquake insurance usually must be purchased separately.
Is My Residential Property Insurance Company Required to Offer Earthquake
Insurance?
The law requires insurers that sell residential property insurance in
California to offer earthquake coverage to their policyholders. Residential
property insurance includes coverage for homeowners, condominium owners,
mobile home owners, and renters. In offering earthquake coverage, insurance
companies can become a CEA participating insurance company and offer the
CEA’s residential earthquake policies or they can manage the risk
themselves. To date, companies that sell over two-thirds of the residential
property insurance in the state have opted to become CEA participating
companies.
Do I Need Earthquake Insurance?
Many people assume their residential insurance policy fully protects them,
but if you look at a typical policy, you will see it does not cover
earthquake loss. And government disaster-relief programs are extremely
limited—they are designed to help you get partly back on your feet, but not
to replace your home and everything you lose. So if an earthquake strikes
tomorrow, will you have the financial resources to pay for earthquake damage
to your home and its contents?
When you consider your resources, ask yourself how much of your investment
in your home you are willing to put at risk. For many California homeowners,
their home is their biggest financial asset. Without earthquake insurance,
how do you plan to protect that asset from the costs of earthquake damage?
If you have a typical home loan and deed of trust, did you know you remain
responsible for the loan balance even if your home is damaged or destroyed
by an earthquake?
Consider taking these basic steps as part of good planning and preparation:
Research the earthquake hazard in your area. Secure the contents of your
home to reduce the likelihood of damage and injury. Investigate how well
your dwelling is designed and constructed to resist damage from earthquake
motion—retrofit the structure if necessary. Analyze your finances and
develop a financial-recovery plan in case an earthquake damages or destroys
your home or its contents.
There is good information available to help you. But only you can decide if
earthquake insurance is right for you.
What is Meant by a “Mini-policy”?
In 1996, by act of the California Legislature, a reduced-coverage,
catastrophic earthquake-insurance policy became available. This so-called
earthquake "mini-policy" is intended to protect a policyholder’s dwelling—to
provide a "roof over your head"—while excluding coverage for costly
non-essential items such as swimming pools, patios, and detached structures.
The base CEA policy is based on and authorized under the mini-policy law.
Such policies are intended to help the policyholder avoid catastrophic loss
while keeping premiums more affordable for more consumers.
What Are My Earthquake Risks?
No part of California is "immune" from earthquakes—in other words, there is
no “low-risk” area in California for Earthquakes—there are only areas of
lower or higher risk.
In general terms, your home’s risk level depends on where you live in
relation to earthquake faults, the age and type of dwelling you live in, and
the soil types where you live.
Some parts of California that have not experienced earthquakes for 200 years
or more might be more susceptible to earthquakes than areas that have
experienced recent earthquakes. Why? Earthquake faults build up tension over
long periods of time; what we experience as an earthquake occurs when that
tension is suddenly released. It is theorized that relatively recent
earthquake activity means that faults have released built-up tension—a lack
of earthquake activity can mean that tension is still building and could be
released at any time as an earthquake.
How Much Earthquake Insurance Should I Have?
Like the basic question of whether earthquake insurance is right for you,
how much coverage is right for you depends on your individual circumstances.
The following questions may help you decide:
Can you afford to replace your household possessions (such as sofas, beds,
TVs, furniture, refrigerators, and clothing) if they were destroyed in an
earthquake? How much would they cost?
If you have to find temporary accommodations because you cannot live in your
home as the result of an earthquake, how much will you need to pay for those
additional living expenses?
If you own your home, how much home equity do you have? Can you afford to
risk losing that equity if an earthquake damages or destroys the home?
How much would it cost to rebuild your home? Do you have assets available to
repair or even rebuild your home after an earthquake?
Do you have a mortgage, second mortgage, or line of credit on your home? Can
you afford to continue repaying those loans while also paying to rebuild or
replace your home?
Keep in mind that the insured value of your dwelling for your earthquake
policy is the same as the amount of coverage specified in your homeowners
insurance policy. If you are underinsured on your homeowners policy, you are
underinsured on your earthquake policy, too.
Won’t the Government Be There to Help Me?
The federal Department of Homeland Security’s Federal Emergency Management
Agency (FEMA) and the Governor’s Office of Emergency Services (OES) in
California respond to, plan for, and help mitigate effects of disasters.
Government disaster-relief programs are designed to help you get partly back
on your feet but not to replace your home and everything you lose.
The primary form of federal disaster relief is the low-interest loan—as a
loan, it must be repaid. Because it is a loan that must be repaid, some
people do not qualify for the loan. FEMA grants for post-disaster emergency
home repairs and temporary rent assistance are only available to individuals
and households who do not qualify for loans.
In addition to creating a plan to take care of your family for immediately
after an earthquake, you should also develop a family plan for long-term
financial recovery.
How Can I Purchase CEA Earthquake Insurance?
CEA earthquake insurance policies are sold only through CEA participating
insurance companies. You can buy CEA coverage only through the insurance
company that provides your residential property insurance and only if that
company is a CEA participating insurance company. Participating insurance
companies process all CEA policy applications, policy renewals, invoices,
and payments and handle all CEA claims.
To establish a new CEA policy, to make changes to an existing CEA policy, to
ask questions about your CEA coverage, or to request a copy of your CEA
policy, please contact your insurance agent or participating insurance
company. To obtain CEA coverage, you must first have a companion residential
insurance policy written through a CEA participating insurance company.
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