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CEA Residential Earthquake Insurance Policies

Insurance Policies

We've gathered some frequently asked questions to help you understand how a CEA policy can help your policyholder recover from the next damaging earthquake.

Q: Does CEA offer stand-alone policies?

A. No. However, since a CEA policy must be with the same participating residential insurance company that the standard residential (fire) policy is with, you can expand your business by explaining to your customer why adding a CEA earthquake insurance policy is beneficial for their financial recovery.

If you’re an independent agent, remember that mixing and matching carriers is not allowed—the residential policy and the CEA policy must both be under the same carrier.

Q: How can I help my customer be better prepared for an earthquake?

A. You can help them:

Q: Can my customers buy a new CEA earthquake insurance policy after an earthquake?

A. Yes. CEA has never imposed a moratorium on selling new earthquake insurance policies following any earthquake, even in the areas directly affected by the earthquake.*

If your customers choose to purchase a new CEA earthquake insurance policy shortly after the occurrence of an earthquake in their area, and if there are aftershocks or other quakes that are related to that same earthquake, then you should help make them aware that their new CEA policy will not cover losses from these aftershocks or other related ground-shaking that occurs within 15 days (360 hours) after that earthquake, though would cover damage from completely unrelated earthquakes that may occur immediately after they purchase their policy. That original earthquake, together with all related shaking that occurs within 15 days, are collectively referred to as the "seismic event" in the CEA policy. In other words, the "seismic event" commences upon the initial earthquake, and all earthquakes or aftershocks that occur within the 360 hours (15 days) immediately following the initial earthquake are considered for purposes of this policy to be part of the same "seismic event."

For a loss to be covered under a CEA policy, both the original earthquake that caused the loss (to your customer’s property or belongings) and the 15-day "seismic event" that the earthquake is part of must commence during the policy period.

If, however, another earthquake occurs after the new policy goes into effect, and that earthquake is not seismically related to the earlier earthquake (not part of the earlier “seismic event”), then your customer’s losses from this new earthquake would be covered, even if they occurred immediately after the effective date of the policy, because those losses would arise from a different seismic event.

If you have customers who are current policyholders and they have experienced damage from a covered seismic event, and another quake occurs as part of the same event (for example, with the 2019 Ridgecrest earthquake, when a 6.4 magnitude earthquake struck and the next day a 7.1 magnitude struck, as part of the same seismic event), our 360-hour definition allows current policyholders to combine all the damage to meet their deductible. In other words, they do not need to meet their deductible each time; they only need to meet it once.

*It is possible, however, that one or more CEA participating insurers, as well as other insurance companies, may declare a moratorium on new sales of their own insurance policies (e.g., homeowners, condominium owners, or renters insurance that covers the risk of fire) in the affected area after an earthquake or other disaster. We recommend you be aware if your company has issued a moratorium on the policy types they offer following recent earthquakes or other disasters.

Q: If there’s a damaging earthquake, won’t the government pay for my policyholder's to rebuild?

A. Government assistance, if available, is limited. The maximum FEMA grant available in 2018 is just $34,000. The average FEMA payout after the 2014 South Napa earthquake was just $2,670. The goal of a grant is not to return a home to its pre-disaster condition. And while loans for rebuilding houses or replacing personal property are sometimes offered, they must be paid back with interest, just like a mortgage.

Q: My client tells me they can't afford earthquake insurance. What can I tell them?

A. Since 1996, construction costs have increased over 140%, yet CEA has lowered its rates by a combined 55%. In addition, starting in 2016, CEA began offering expanded coverage choices and more deductible options. With these more flexible policies, it’s easier for you to help your client choose a CEA policy that fits their needs and budget. If they’re a homeowner, make sure they know about Homeowners Choice, which lets them cover just the dwelling itself, or have separate deductibles for dwelling and personal property.

Q: My client wants different billing options. What should I tell them?

A. The participating residential insurer who you work for is responsible for deciding what payment methods and schedules they want to offer your clients. Make sure you’re aware of all payment methods and installments your company offers, and work to find the best option for your clients’ needs.

Q: My client's home survived the last earthquake, why should I offer them earthquake insurance?

A. Since every earthquake is different, a home that was spared in one earthquake can be badly damaged or completely destroyed by the next.

Q: Why should I offer earthquake insurance to my residential insurance customers?

A. In California, a residential insurance policy doesn’t cover earthquake damage. A CEA policy can:

  • Protect your policyholders from financial loss
  • Help your policyholders replace damaged or destroyed personal items
  • Be the difference between having the money to rebuild/repair a home, or having to take out a loan or trying to cover all costs themselves
  • Provide loss of use coverage if your policyholder can’t access their home due to an earthquake
Q: Does CEA have a preprinted agent responsibility waiver? (Similar to the FEMA provided one)

A. Agents who sell California Earthquake Authority (CEA) policies are agents of CEA participating insurers, and not agents of CEA. CEA policies are sold and serviced in their entirety by our participating insurers, so they would be the ones to provide any necessary agent documents.  Please contact the participating insurer you work for to obtain any such items.

Q: What is CEA doing regarding late payments or other CEA policy issues during the COVID-19 pandemic?

A. CEA policy billing, payments, changes and renewals are not handled by CEA. The servicing of an insured's policy—including any accommodations due to the ​COVID pandemic—is handled by the residential property insurance company that issued their CEA policy. You will need to contact the insurance company through which your customer's CEA policy was issued for details on how they are managing grace periods, late payments, or other policy issues that may arise related to COVID-19.

Read the California Insurance Commissioner's latest bulletin on grace periods for more information.