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Earthquake insurance in California is changing

Earthquake insurance in California is changing

 


More insurance changes are underway.

This time, they are influencing earthquake policies.

California is no stranger to earthquakes. However, although it may happen here, earthquake insurance is not required, and only about 10% of the population actually has it.

If you're one of them, your policy is likely with the California Earthquake Commission, which provides the majority of earthquake insurance in California.

They have sent letters to customers informing them of a series of policy changes.

Among them: Instead of covering $200,000 worth of personal property, all policies will now only cover up to $25,000.

Additionally, if your home was built before 1980 and has not been updated and modified, or if your home is worth more than $1 million, you do not have the option of paying a 5% or 10% deductible. The minimum has jumped to 15%.

The changes went into effect last August for new policies and last November for policy renewals.

“The California Earthquake Commission is trying to keep its books balanced,” said Amy Bach, executive director of United Policyholders, an insurance industry nonprofit.

She explained why the policies changed.

“They faced the same problem as regular insurers, which is that the reinsurance they had to buy for the high-dollar risk became very expensive,” Bach said.

CEA cites high levels of inflation and rising construction costs as factors as well, telling customers on its website: “Changing our insurance policy options will help offset significant, unprecedented premium increases for CEA policyholders in the future, making earthquake insurance more affordable for Californians.” “

Estimates vary, but on average, Californians pay $739 per year for earthquake insurance.

Bach said that while the recent policy changes are intended to keep premiums low, she expects them to rise as well.

She also fears it will deter more homeowners from opting out of earthquake coverage.

Before the 1994 Northridge earthquake, homeowners' insurance policies would have included earthquake coverage, but companies pulled out because of the cost.

Bach would like to see this system return, saying we need more options for more protection.

“We're going to have to come up with some alternative sources for that kind of catastrophic risk protection, because it's not economically healthy to have that many homes vulnerable to economic ruin,” Bach said.

RELATED WATCH: Church struggles with expenses after insurance company drops policy over satellite images

Sources

1/ https://Google.com/

2/ https://www.cbs8.com/article/news/local/working-for-you/earthquake-insurance-policy-changes/509-e3ae6d92-bbf6-47fc-9960-459ecbfe2dca

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