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Debunking CEA Deductible Myths

Debunking CEA Deductible Myths

Did you know that CEA’s deductible never has to be paid out-of-pocket by the insured before getting a claim payment?

Our agent trainers tell us:

“During agent training sessions, deductibles tend to be an area where agents experience an “ah-ha!” moment because they truly didn’t understand how the CEA deductibles work. We know it works a bit differently than other types of insurance, so we want to make sure agents selling CEA policies know how to explain it to their policyholders.”

Here are the most commonly misunderstood aspects of CEA deductibles:

Myth #1: “The Insured Would Have To Pay The Deductible Out Of Pocket."

Fact: CEA policy deductibles are the amount that is "deducted" from an insured loss, so your clients do not have to pay the deductible out of pocket in order to receive a claim payment from CEA.

To explain further: After an insured’s dwelling or personal property has experienced earthquake damage, CEA simply takes the total covered damage amount, subtracts the coverage deductible, and pays the full amount of the covered loss up to the applicable coverage limit. If the covered damage exceeds the deductible, the insured receives a payment.

An insured does not have to pay up front or out of pocket, nor are they required to commence or complete repair work before receiving their claim payment!

Visit the Coverages & Deductibles pages of our policies—Homeowners, Condo-Unit Owners, Mobilehome Owners and Renters—to take a deeper dive by checking out some claim payment examples!

Myth #2: "The Deductible Is So High That Nothing Will Be Paid If There Is An Earthquake."

Fact: Some coverages, such as the first $1,500 of emergency repairs on a CEA Homeowners policy, and Loss of Use, are never subject to a deductible.

And with the Homeowners Choice policy, thanks to the separate deductible option, a personal property payment may be more likely after a moderate quake that doesn't damage the dwelling.

With all of our policy deductible options ranging from 5 to 25 percent, insureds can choose the deductible that best meets their needs and budget.

Myth #3: "It Is Highly Unlikely That A Minor Earthquake Will Result In Damage Greater Than The Deductible."

Fact: Experts agree that even a minor earthquake can result in significant damage, depending on things like location, depth of the quake and a structure's resistance to seismic damage.

Plus, scientists say that a larger earthquake is expected—there’s a more than 99% chance of one or more magnitude 6.7 or greater earthquakes striking California.

Remember, without a separate earthquake policy in place, people who have earthquake damage will be responsible for paying 100 percent of recovery costs themselves.

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Want More?

We offer free CEA earthquake policy training, which includes an in-depth review of our policies, a full comparison of our standard and Choice Homeowners policies, policy enhancements, information about how the deductible is applied, and overcoming objections. Sign up for a training today!

With CEA’s available training options, you’ll be ready for any CEA earthquake insurance question that comes your way. In addition to earning 2 FREE CE credits, it make you a valuable resource to your policyholders and you’ll reap many other benefits as well:

  • Customer retention: The more insurance products you can offer and expertly discuss, the less likely your customers will look for another agent. And since the retention rate for CEA policies is about 90%, it makes sense to train up on CEA earthquake insurance.
  • ​Growing your book of business: On average, 9 out of 10 of your clients need earthquake insurance, so there is potential for increased commission.

We hope to see you in a training session soon.