California Geological Survey and USGS with National Guard and Navy personnel view road damage associated with the magnitude 7.1 event. (Photo credit: Ken Hudnut, USGS.)
On the morning of Thursday, July 4, 2019, a M6.4 earthquake struck near the town of Ridgecrest in Southern California. The next day, an even larger (M7.1) earthquake struck near the same area, releasing 10 times as much energy as the foreshock of July 4.
As an agent, over the past month you likely fielded a higher number of calls than usual as a result of these two quakes. If you have insureds who are among the 2,000 CEA policyholders potentially affected by these quakes, you may be busy helping them with their claims. And if you’re an agent anywhere in California, you may be getting calls from potential new customers.
In this blog, we look back on the lessons learned with information that we hope can help you and your policyholders be prepared for future big earthquakes.
People Were Confused about What to Do During an Earthquake
Unfortunately, despite living in earthquake country, many people are not prepared for earthquakes. In the days following the first Ridgecrest earthquake, there was a lot of misinformation on how to best survive a big shaker. Remember, doorways and bathtubs are not the safest place!
In the event of an earthquake, practice Drop, Cover, and Hold On: drop to the ground, get under a sturdy piece of furniture like a table or desk and cover your head and neck, and hold on.
There Was Earthquake Damage
While there were areas in Kern County and San Bernardino County that did feel very strong to severe shaking, and there was damage, the majority of homes remained in relatively good shape following the two earthquakes.
Why was the damage relatively minor for most homes? The areas’ homes are relatively new and built with the types of materials that make them more resilient to earthquakes, and lack the most vulnerable type of structures. Had the epicenters been near bigger cities with less resilient buildings, quakes of these magnitudes would have been devastating.
Although it is true that it could have been much worse, we cannot overlook the devastation that these large events caused. In SoCal, people have had to move out of their homes due to earthquake damage, and many had to live in shelters.
There Was Confusion about New Policy Sales and Whether There Was a Moratorium
In the week following the Ridgecrest earthquakes, CEA and the Department of Insurance received reports that some insurers and agents were declining writing earthquake policies in various areas of the state. But CEA has never prevented insureds from buying earthquake insurance.
On July 11th, California Insurance Commissioner Ricardo Lara and CEA CEO Glenn Pomeroy partnered to hold a conference call to provide information and dispel confusion about an alleged "moratorium" on new earthquake policies.
"CEA policies can be purchased anywhere in California, at any time, and by anyone who has a home insurance policy with one of our participating insurers," CEA CEO Glenn Pomeroy said. "However, for new policies purchased after an event, we do not provide coverage for the next 360 hours, or 15 days, for earthquakes that are seismically related to the initial event."
What does “seismically related” mean to for insureds?
As you explain the benefits of earthquake insurance to potential new customers, please be sure to inform them that aftershocks from the Ridgecrest earthquakes are not covered under policies issued after the initial quake of July 4. Specifically, all aftershocks that occur within 15 days (360 hours) of the initial earthquake are considered to be part of the same seismic event, or “seismically related,” and are therefore not covered if the policy was issued after the onset of the event.
Commissioner Lara additionally issued a bulletin notice to insurers to ensure that all agents and brokers selling earthquake insurance are following California law.
For more details about what constitutes a seismic event, and how CEA has never imposed a moratorium, visit our FAQs page and read the answer to the question, “Can my customers buy a new CEA earthquake insurance policy after an earthquake?
Although There Were Two Large Earthquakes, They Are Considered One Event
When it comes to filing a claim, this “single-event” rule has the advantage of simplifying the process for CEA policyholders who were affected by the Ridgecrest earthquakes. Those policyholders who are filing claims can treat the M6.4 and M7.1 earthquakes as one seismic event. This means they only have to file one claim for damage caused by both earthquakes, and only have to meet the deductible once. The total damage from both quakes (and related aftershocks) will be used to calculate the deductible and claim payment.
If you’re getting calls from CEA policyholders who were affected by the recent earthquakes, or who want to understand the benefits of a CEA policy, now may be a good time to let them know: all CEA policies offer coverage for emergency repairs, allowing policyholders to secure their dwellings right away. And policyholders who have chosen the Loss of Use option will never have to pay a deductible for this coverage.
You can also remind your CEA policyholders that no matter the type of coverage, they are not required to pay a deductible out of pocket in order to receive their claim payment. Their deductible will simply be subtracted from the total cost of their covered earthquake damage, and then CEA will pay the remainder, up to the coverage limit, as a claim payment. For more about how CEA’s deductibles work, and the misconceptions policyholders sometimes have, visit Sales Tools.
CEA is Here for You
These weeks have likely been busy for you.
As always, CEA is here to help you—whether it be through our free training, with our exclusive Marketing Value Program, or with regular updates and information on our Facebook, Twitter, Instagram, and LinkedIn pages.
We’re also here to help if you have urgent questions. If you need more information, please don’t hesitate to contact us.