California earthquake insurance

Homeowners insurance does not cover earthquakes. Because earthquakes are so common in California, homeowners insurance companies are required to offer earthquake coverage.

Earthquakes are a reality for many Californians, with earthquakes occurring around every four days on average in the Golden State. Despite the frequency of earthquakes, only 13% of California homeowners have earthquake insurance. Homeowners insurance, while it covers many types of accidental damage to your property, does not cover earthquakes. That means if the structure of your home or your personal property is damaged by an earthquake, your homeowners insurance would not cover you and you’d be stuck paying out of pocket.

Because earthquakes are such a common natural disaster in California, homeowners insurance companies are required to offer separate earthquake insurance when you purchase a policy. Even if you decline to buy earthquake insurance when you buy your homeowners policy, your carrier must re-offer to sell you earthquake insurance every other year.

Many California homeowners insurers sell earthquake policies through the California Earthquake Authority (CEA), a not-for-profit organization that administers earthquake insurance to carriers. Depending on your insurance company, you may instead be able to add an endorsement to your policy for earthquake damage, however the coverage isn’t as robust as an earthquake policy. You can also buy a standalone earthquake policy through speciality carriers.

Key Takeaways

  • California homeowners insurance companies are required to sell earthquake insurance

  • The California Earthquake Authority insures the most homes in California. The CEA administers earthquake policies to participating insurance companies

  • Insurance companies may sell their own non-CEA administered earthquake insurance and may offer earthquake endorsements

  • California homeowners can also buy standalone earthquake insurance policies from specialty carriers. Prices will vary from company to company

California earthquake insurance: What you need to know

Earthquakes in California result in millions of dollars worth of property damage every year, damage that can be costly to repair and can make your home unlivable. Like a typical home insurance policy, an earthquake insurance policy contains dwelling coverage, personal property coverage, and loss-of-use coverage,. Earthquake insurance also contains additional coverage, like building code upgrade coverage, which covers the increased costs you may accrue in order to make your home compliant with local building code standards after an earthquake.

There are multiple ways for California homeowners to purchase earthquake insurance:

  • Through an insurance company participating in the CEA

  • Through a specialty carrier

  • By adding an earthquake endorsement to a homeowners policy

  • Through a homeowners insurer that sells non-CEA earthquake insurance

How you purchase earthquake insurance is up to you, but the CEA insures the most homes in California, and specialty carriers tend to be more expensive than CEA administered policies.

What is the California Earthquake Authority?

The California Earthquake Authority (CEA) is a non-profit organization that sells earthquake insurance policies through participating insurance companies. The CEA underwrites most of the earthquake insurance policies in California, protecting more than one million policyholders.

You do not buy earthquake insurance directly from the CEA. Instead, you buy it directly from insurance companies that are members of the CEA, meaning you’d buy earthquake insurance from your homeowners insurance company and it’d be administered by the CEA.

That said, not all homeowners insurance companies are members of the CEA, so when you’re shopping for insurance you should check with your insurer to learn if they participate in the program.

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What does CEA earthquake insurance cover?

The CEA offers standard earthquake insurance coverage, but with more flexibility in deductible and policy options. The CEA offers two different types of policies: homeowners insurance choice policy and standard homeowners policy . Below are the differences in coverage, limits, and deductible requirements between the two policies.

CoveragesStandard homeowners policyHomeowners choice policyWhat does it cover?
Dwelling coverageIncluded with the same coverage limits as your homeowners policy. Deductible required.Included with the same coverage limits as your homeowners policy. Deductible required.Protects the structure of your home from quake damage. Also covers structures attached to your home, such as an attached garage.
Personal property coverageIncluded with a limit of $200,000. Deductible included with dwelling coverage deductible.Optional coverage with a limit of $200,000. Separate deductible from dwelling.Covers your personal belongings.
Loss-of-use coverageIncluded up to $100,000. No deductible.Optional coverage with a limit of $100,000. No deductible.Pays for additional living expenses if you temporarily need to live elsewhere while your home is repaired. Can cover expenses like hotel stays, rent, food, and gas.
Building code upgradeIncluded up to $10,000 with the option to increase limit to $30,000. Paid after dwelling deductible is met.Included up to $10,000 with the option to increase limit to $30,000. Paid after dwelling deductible is met.Covers mandatory repairs in order to stay up to date with required local building codes.
Emergency repairsIncluded up to 5% of dwelling and 5% of personal property limit. First $1,500 is not subject to a deductible.Included up to 5% of dwelling and 5% of personal property limit. First $1,500 is not subject to a deductible.Covers emergency, immediate repairs needed in order to prevent further damage to your home or personal property.

Both policies also offer two additional optional coverages: breakables coverage to protect glassware and fine china, and exterior masonry veneer coverage to protect nonstructural elements of your home, like brickwork or tile.

Understanding earthquake insurance deductibles

A deductible is the amount you need to pay out of pocket after a loss before your insurer kicks in the rest. Earthquake insurance deductibles are different from homeowners insurance deductibles, which are typically a flat amount of $500 or $1,000. Instead, earthquake deductibles are a percentage of the coverage limit. For example, if you have $10,000 in earthquake personal property coverage and your deductible is 10%, you’d have to pay a $1,000 deductible before your insurer kicks in the remaining $9,000.

You choose your deductible when you purchase your policy. CEA earthquake deductibles are 5% to 25% of the coverage limit. CEA does not require you to pay out of pocket for your deductible, instead it is subtracted from your covered damage. Non-CEA earthquake deductibles are typically 10% to 20% of the coverage limit, according to the NAIC.

CEA earthquake insurance companies in California

Below are homeowners insurance companies that currently participate in the CEA.

To learn about other residential insurance companies that participate in the CEA, like renters and condo insurers, visit the CEA website

Other ways to buy earthquake insurance in California

As we mentioned, not all homeowners insurance companies are members of the CEA. Some carriers sell their own earthquake insurance policies and earthquake endorsements, and specialty carriers may sell standalone earthquake policies, meaning you can buy earthquake insurance from them and your homeowners insurance from a standard insurance company.

Specialty carriers in California

As the name implies, specialty carriers sell insurance policies that can protect your home or property from specific or special circumstances that are not typically covered by a standard homeowners policy. There are specialty carriers in California that sell standalone earthquake insurance policies, meaning you can just buy an earthquake policy, you won’t be required to buy homeowners or condo insurance with them.

Below are a few specialty earthquake carriers in California:

Non-CEA earthquake insurance

Insurance companies may sell their own earthquake insurance. According to the California Department of Insurance, over 30 residential insurance companies offer their own earthquake insurance. Coverage may vary from company to company, as will the cost of your policy.

Can I add an earthquake endorsement to my homeowners policy?

Depending on your insurer, you may be able to add an earthquake endorsement to your homeowners insurance policy. An earthquake endorsement will add coverage for quake damage to your policy, however coverage won’t be as comprehensive as an actual earthquake insurance policy, but it will likely be cheaper.

How much does earthquake insurance cost in California?

How much earthquake insurance costs depends on a variety of factors, including your insurance company and coverage amount.

Other factors that determine your earthquake insurance rates:

  • The size of your home

  • Location of your home (if you live close to a fault line your rates will be higher)

  • Your home’s foundation (slab or concrete)

  • The age of your home

  • Your home’s construction (frame or masonry)

  • Additional coverages

  • Discounts (the CEA offers up to 25% discounts if your home was seismically retrofitted to better withstand earthquakes)

The CEA has a useful earthquake premium calculator on their website to give an estimate of how much your premiums will cost if you purchase a CEA administered policy.