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Recent Policy & Rate Changes

Why did CEA Change its rates?

CEA is required to base our insurance rates on the best available science. In 2015, the US Geological Survey released a new earthquake fault zone and risk study, UCERF3, which changed previous earthquake risk models. As a result, we had to change our rating factors to reflect this most recent new science.

The California Department of Insurance approved a CEA rate and form filing in 2018 that went into effect July 1, 2019, directing CEA to implement new rates over three consecutive years, on:

  • July 1, 2019
  • July 1, 2020
  • July 1, 2021

In September 2021, CDI approved an additional 2.9% rate increase, which went into effect on April 1, 2022. Learn more about the 2022 rate increase.

What should you expect?

CEA policyholders may see their premiums increase, decrease or remain the same, depending on the product and/or other new rating factors.

Why are Some CEA Policyholders Experiencing a Premium Increase?

If the insured's premium has gone up, it may be due to one or more of the following factors:

  • New science showing increased earthquake risk in certain rating territories. CEA is required to base our rates on the best available science indicating risk of earthquake.
  • If the reconstruction cost of the insured's home has increased (as indicated by the insured value on the residential policy), the CEA earthquake insurance premium will also increase.

How Can You Help Your Policyholder Lower Their Premium If They Experienced an Increase?

Here are some strategies to lower the CEA earthquake insurance premium:

  • Choose a higher deductible (up to 25%) to pay a lower yearly premium cost.
  • Adjust the amount of coverage:
    • Reevaluate the coverage limit for coverages like personal property, in case it is higher than the value of the insured's belongings.
    • Select Homeowners Choice, which allows you to separate the insured's coverages, or just cover the dwelling itself, which will keep premium costs down.

Remember, our Premium Calculator can help you create a comparison for the policyholder to review.

If the insured has a pre-1980 home on a raised foundation, encourage them to apply for the Earthquake Brace + Bolt (EBB) program to receive up to $3,000 toward a seismic retrofit, which could then qualify them for a premium discount ranging from 10% to 25% from CEA (depending on the house’s age).

Even if the client doesn't qualify for a retrofit grant, encourage them to consider retrofitting their older house out of pocket to receive a premium discount from CEA—although this does cost money up front, in the long term it makes their house safer and strengthens it against damaging earthquakes, plus they will receive a premium discount of up to 25%.

Learn more about the science behind CEA’s rating changes.

How CEA Rate Changes are Approved

The California insurance commissioner must approve all earthquake insurance products and rates in the state, including CEA's.

CEA is a Not-for-Profit Company

When the California Legislature created CEA in the wake of the devastating Northridge earthquake, legislators mandated that:

  • We offer earthquake insurance to all Californians, regardless of their earthquake risk.
  • We use the best available scientific information to set our rates.
  • Our rates and rate changes are reviewed and approved.
And that we be:
  • Publicly managed by a governing board, which includes the Governor, Treasurer and Insurance Commissioner.
  • Privately financed, in part by our participating residential insurers when they join our organization, and by premiums we receive from our policyholders.

These requirements allow us to remain financially strong and ensure a firm commitment for us to be careful stewards of our policyholders' funds—we ensure pricing is fair to all policyholders and is tied to their specific earthquake risk.

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