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Standard vs Homeowners Choice Policies for Earthquake Insurance

Standard vs Homeowners Choice Policies for Earthquake Insurance

If you’ve ever wondered what the difference was between CEA’s two policy options, standard Homeowners and Homeowners Choice, we can help!

There are really two key differences:

  • How the deductibles are handled, and
  • Whether or not the insured can pick and choose which coverages they want to purchase.

We’ll go over the basic differences here, but please stay tuned to the end to learn about some additional opportunities to build your CEA earthquake policy knowledge.

One Deductible or Two

Standard Homeowners

Standard Homeowners offers deductibles of 5%-25%. Allows the insured to purchase all coverages, bundled under a single deductible. Dwelling and personal property losses are paid when the dwelling deductible has been exceeded by a covered dwelling loss. Only when the dwelling deductible has been exceeded will the policyholder be eligible for a personal property claim payment.

Homeowners Choice

Homeowners Choice offers deductibles of 5%-25%. Allows the insured to select the coverages needed, as well as providing individual deductible options for both dwelling and personal property. Losses to personal property are paid as soon as the personal property deductible has been met—and the personal property deductible must be less than or equal to the dwelling deductible. This can result in a claim payment for personal property damage in a more minor quake, even if the dwelling has not been damaged! And, when the dwelling deductible is met, the personal property deductible is waived.

Homeowners Choice claim-payment example:

  • If your customer's dwelling is insured for $500,000 with a 10% deductible ($50,000), and
  • They have personal property covered for $75,000 with a 5% deductible ($3,750), and
  • An earthquake causes damage to the dwelling that is less than the dwelling deductible, but they have $50,000 in personal property damage, then
  • Although their dwelling deductible is not met, their separate personal property deductible allows them to receive $46,250!
    • This payment is the difference between the covered damage to personal property ($50,000), less the deductible ($3,750).

Whichever policy type your customer has, they will never have to pay the deductible out of pocket to receive a claim payment—the deductible is always just subtracted from the total claim amount.

Freedom to Select Coverage Options

Standard Homeowners - requires the insured purchase the policy with all its coverages. Coverages cannot be de-selected.

Homeowners Choice – allows the insured to select which coverages, and coverage limits, they wish to purchase.

With a standard Homeowners policy, all its named coverages come as a ‘package.’ For some insureds, this may be ideal for their personal needs. But, if you want the ability to help your customer find a policy to fit their specific coverage needs or budget, Homeowners Choice will allow them more freedom in selecting the ideal coverage options for them and their family.

Find Out More About Policy Coverages and Deductibles

Learn more by viewing a detailed breakdown of the policy coverage and deductible specifics, as well as sample policy docs.

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. Not only will it make you a valuable resource to your policyholders but, in addition to earning 2 FREE CEs, you’ll reap many other benefits as well:

  • Customer retention: The more insurance products you can offer and expertly discuss, the more likely your customers will stay loyal to you. 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 haven’t yet purchased earthquake insurance, so there is potential for increased commission.

We hope to see you in a training session soon.