California – Consider earth quake insurance for your home after Mexico shake; CEA has a tool to estimate

Insurers in California were required to offer earthquake coverage along with general homeowners insurance when the Northridge quake occurred. After Northridge, premiums for quake coverage soared, coverage was restricted and insurers balked at being forced to write new policies.

That led the state Legislature to create the CEA, whose participating insurers now include State Farm, Allstate, Mercury, Progressive, Farmers and Liberty Mutual.

Initially, the CEA’s policies were expensive and somewhat skimpy, including only $5,000 for replacing personal property (in addition to the replacement cost of the structure) and only one deductible of 15%.

Today, however, the CEA personal-property coverage is up to $200,000, and the “loss of use” coverage — for living expenses while a home is being repaired or rebuilt — is up to $100,000. Condo policies can cover damage assessments levied by homeowner associations.

Premiums vary depending on where the house is located, its age, style of construction and soil conditions, to name a few factors. But overall, the CEA says premiums on its policies have dropped by more than 50% since the authority was created. (The CEA website has a tool that shows coverage options and estimated cost.)

Also, the deductibles on CEA policies now range from 5% to 25%. And the CEA notes that another fear about earthquake insurance— that homeowners and renters must come up with the money to pay deductibles — is unfounded because the deductible is subtracted from the claim payment.

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