Agency to liberalize earthquake insurance

The need for the coverage is alive and well, so why have Californians stopped buying it?

Insurance News

By Lyle Adriano

The California Earthquake Authority is set to offer more flexible options for earthquake insurance in 2016 following reports that only a small fraction of homes are actually covered.

According to the CEA, at the time of the 1994 Northridge earthquake, about 30% of homes in the region were covered for earthquakes. Today, however, only half of that figure maintains coverage.
Feedback from consumers reveals that many chose not to opt for earthquake insurance due to its steep cost and inflexibility.

The CEA hopes to reverse this trend by rolling out a new suite of earthquake insurance options that cater to all homeowners, regardless of their property types.

"Now it is not a one size fits all, it's for the consumer to choose," said CEA head Glenn Pomeroy.
A calculator on the CEA’s website allows consumers to generate an estimate of their earthquake insurance costs based on the location and values of their homes. Costs are determined based on the proximity of a home to an active fault and the age of the structure.

Notably, homes constructed pre-1940s are vulnerable to tremors.

Those homeowners who strengthen the foundation of their properties are eligible for a discount on their insurance.

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