Who Writes Earthquake Insurance in California?

California sits on a complex network of fault lines, making it one of the most seismically active regions in the United States. Thousands of earthquakes occur annually, with a high probability of significant seismic events in the coming decades. These pose a substantial risk to property owners. Standard homeowners insurance policies typically do not cover earthquake damage, leaving a significant gap in financial protection. Securing earthquake insurance is important for safeguarding investments and financial well-being.

The California Earthquake Authority (CEA)

The California Earthquake Authority (CEA) is the primary writer of earthquake insurance in California, established in September 1996 after the Northridge Earthquake. It operates as a publicly managed, privately funded, not-for-profit public instrumentality, distinct from a traditional government agency. The CEA is the largest residential earthquake insurer in the U.S., accounting for approximately two-thirds of residential earthquake policies sold within the state.

The CEA does not directly sell insurance policies to the public; instead, it functions through a network of participating residential insurance companies. These member insurers handle the sale, servicing, and claims processing for CEA policies. The CEA’s financial stability is maintained through contributions from these insurers, policyholder premiums, and investment returns, operating independently of the state budget.

CEA policies typically offer coverage for the dwelling structure, personal property, and additional living expenses (ALE) if a home becomes uninhabitable after an earthquake. Deductibles for CEA policies are expressed as a percentage of the dwelling coverage, ranging from 5% to 25%, rather than a fixed dollar amount. For example, a 15% deductible on a $500,000 dwelling would mean the homeowner is responsible for the first $75,000 in damages. The CEA also provides up to $1,500 for emergency repairs without a deductible, and its “Homeowners Choice” policy can waive the personal property deductible if the dwelling deductible is met.

Other Private Insurance Companies

While the California Earthquake Authority (CEA) is the dominant provider, other private insurance companies also write earthquake insurance in California. These insurers may offer standalone earthquake policies or policies distinct from CEA policies. Some private policies feature different coverage limits, deductible structures, or specialized offerings. For instance, some private insurers offer deductibles as low as 2.5%, lower than the CEA’s minimum of 5%.

California law mandates that insurers selling homeowners’ policies must offer earthquake coverage to their policyholders. California Insurance Code Section 10081 ensures homeowners are presented with the option to protect their property against seismic events. The offer must be provided in writing, detailing coverage limits, deductible, and estimated premium. Policyholders are generally given 30 days to accept this offer. If declined, the insurer must re-offer earthquake coverage every other year upon renewal of the residential property insurance policy.

Acquiring Earthquake Insurance

Obtaining earthquake insurance in California involves steps to ensure adequate property protection. A primary method is to contact your current homeowners insurance provider, as many are participating insurers with the California Earthquake Authority (CEA) or offer their own earthquake policies. Alternatively, independent insurance agents can provide quotes from various carriers, including CEA-affiliated and other private insurers. The CEA’s website also features a list of participating insurers and a premium calculator to estimate costs.

When seeking a quote, you need to provide basic property information, such as address, home’s age, construction type, and proximity to known fault lines. These factors influence perceived risk, premium, and deductible options. Compare multiple quotes from different providers to understand the range of coverage limits, deductible percentages, and overall premiums.

Once you select a policy, review all policy documents. This includes understanding coverage, specific exclusions, and how the deductible applies in a claim. Homeowners may also explore seismic retrofitting their homes, which can lead to discounts on earthquake insurance premiums by reducing damage risk.