Frequently Asked Questions (FAQs)

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.

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.

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

A. Your client does not have to pay their deductible out of pocket to receive payment on a claim. The deductible is subtracted from their covered damage, so they don’t have to pay any of the deductible up front before receiving their claim payment.

Both standard Homeowners and Homeowners Choice offer deductibles ranging from 5-25%. With the standard policy, all of your insured’s coverages are together under one deductible. With Homeowners Choice, they can choose to have separate deductibles for their dwelling and personal property. And if earthquake damage meets the dwelling deductible, the personal property deductible is waived.

A.CEA is unique because we are a not-for-profit residential insurer and are required to have actuarily sound rates. Our public mission is to help Californians prepare for and recover from damaging earthquakes through education, mitigation and insurance. CEA insures over one million households and writes two-thirds of all residential earthquake policies sold in California.

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.

A. You can help them:

• Understand earthquake risk where they live
• Know the Seven Steps to Earthquake Safety
• Learn how to retrofit their house
• Purchase the earthquake insurance policy that is right for their needs and budget

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.

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.

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.

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.

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

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

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.

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.

A. If the insured's qualifying home was built before 1980 and has been seismically retrofitted, they may qualify for up to a 25% premium discount with a retrofit verification.

Learn more about Earthquake Brace + Bolt (EBB) from the California Residential Mitigation Program offering grants of up to $3,000 to help pay for a seismic retrofit. With a verified retrofit, homeowners may be eligible for a premium discount.

A. Use CEA’s premium calculator for agents to help your client find a policy that works best for them. You can play around with coverage limits and deductible options, and talk them through their coverage choices (such as all coverages bundled together under one deductible or separated out for our Homeowners Choice policy) to make sure they have the policy that fits their needs.

A. The insured does not have to pay their deductible out of pocket to receive payment on a claim. The deductible is subtracted from their covered damage, so they don’t have to pay any of the deductible up front before receiving their claim payment.

Both standard Homeowners and Homeowners Choice offer deductibles ranging from 5-25%. Upcoming policy options changes will affect deductible options. Deductibles available are 5%, 10%, 15%, 20%, or 25%. For new policies written on or after August 1, 2023 and renewals on or after November 1, 2023, homes with a Coverage A dwelling limit greater than $1,000,000, or dwellings built before 1980 on a raised or other type foundation that do not have a verified retrofit, are only eligible for a 15%, 20% or 25% deductible. Learn more about our 2023 Policy Option Changes.

With the standard policy, all of the insured coverages are together under one deductible. With Homeowners Choice, they can choose to have separate deductibles for their dwelling and personal property. And if earthquake damage meets the dwelling deductible, the personal property deductible is waived.

A. There are thousands of known faults in California, and scientists continue to discover new ones. Since earthquakes can happen anywhere in California, damage to your client’s home and personal property is always possible. Check to see earthquake risk near you and your client and help them take steps to get prepared, which includes purchasing the best earthquake policy to meet their needs and budget.

A. California has two-thirds of our nation's earthquake risk. Structures that lack adequate sill plate bolting and cripple-wall bracing are more susceptible to earthquake damage.

The frames of older houses are often not bolted to their foundations, and their cripple walls may lack bracing. Houses without adequate bolting and bracing can slide or topple off their foundation during an earthquake, requiring potentially very expensive repairs. But this serious damage can be prevented with a proper seismic retrofit.

Your client may be eligible for financial help to pay for their house's retrofit. Learn more about our program—Earthquake Brace + Bolt—that offer grants of up to $3,000 to help pay for a seismic retrofit.

CEA policyholders with properly retrofitted houses are eligible for a discount of up to 25% off their CEA policy premium.

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.

A. Remind your client that they do not have to pay their deductible out of pocket to receive payment on a claim. The deductible is simply subtracted from their total covered damage amount, and then CEA pays the full amount of their covered loss up to the applicable coverage limit. The policyholder doesn’t have to pay any of the deductible up front before receiving their claim payment. And, of course, it’s worth noting that while the CEA has a policy deductible ranging from 5% to 25%, for those who don’t purchase earthquake insurance, they essentially have a deductible of 100%!

Both standard Homeowners and Homeowners Choice offer the same range of deductibles (5% to 25%). Upcoming policy options changes will affect deductible options. Deductibles available are 5%, 10%, 15%, 20%, or 25%. For new policies written on or after August 1, 2023 and renewals on or after November 1, 2023, homes with a Coverage A dwelling limit greater than $1,000,000, or dwellings built before 1980 on a raised or other type foundation that do not have a verified retrofit, are only eligible for a 15%, 20% or 25% deductible. Learn more about our 2023 Policy Option Changes.

With the standard policy, all of your insured’s coverages are together under one deductible. With Choice, they can choose to have separate deductibles for their dwelling and personal property. And if earthquake damage meets the dwelling deductible under Choice, the personal property deductible is waived.

A. Yes. Loss Assessment coverage can be added to the insured's CEA condo policy and has options up to $100,000 for an individual unit owner to help cover the cost of special assessments their Home Owners Association (HOA) may assess for the cost of repairing the unit structures, or may be used towards the HOA’s master policy deductible. For all terms and conditions please read the CEA condominium policy.

A. Use CEA’s premium calculator for agents to help your condo client find a policy that works best for them. You can play around with coverage limits and deductible options, and add the coverage choices they’re interested in, to make sure they have the policy that fits their needs.

A. The insured does not have to pay their deductible out of pocket to receive payment on a claim. The deductible is subtracted from their covered damage, so they don’t have to pay any of the deductible up front before receiving their claim payment. And remember that Loss of Use never has a deductible.

A. There are thousands of known faults in California, and scientists continue to discover new ones. Since earthquakes can happen anywhere in California, damage to your client’s condo unit and personal property is always possible. Check to see earthquake risk near you and your client and help them take steps to get prepared, which includes purchasing the best earthquake policy to meet their needs and budget.

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.

A. Your policyholder's may receive a 21% discount on their CEA earthquake insurance premium if their mobilehome:

• Has been reinforced by an earthquake-resistant bracing system certified by the California Department of Housing and Community Development (HCD), or

• Has been installed on an approved foundation system in accordance with subdivisions (a) or (b) of section 18551 of the California Health and Safety Code.

Learn more about premium discounts for mobilehomes.

A. Use CEA’s premium calculator for agents to help your mobilehome client find a policy that works best for them. You can play around with coverage limits and deductible options, and talk them through their coverage choices (such as all coverages bundled together under one deductible or separated out for our Homeowners Choice policy) to make sure they have the policy that fits their needs.

A. The insured does not have to pay their deductible out of pocket to receive payment on a claim. The deductible is subtracted from their covered damage, so they don’t have to pay any of the deductible up front before receiving their claim payment.

Both standard Homeowners and Homeowners Choice offer deductibles ranging from 5-25%. Upcoming policy options changes will affect deductible options. Deductibles available are 5%, 10%, 15%, 20%, or 25%. For new policies written on or after August 1, 2023 and renewals on or after November 1, 2023, homes with a Coverage A dwelling limit greater than $1,000,000, or dwellings built before 1980 on a raised or other type foundation that do not have a verified retrofit, are only eligible for a 15%, 20% or 25% deductible. Learn more about our 2023 Policy Option Changes.

With the standard policy, all of your insured’s coverages are together under one deductible. With Homeowners Choice, they can choose to have separate deductibles for their dwelling and personal property. And if earthquake damage meets the dwelling deductible, the personal property deductible is waived.

A. There are thousands of known faults in California, and scientists continue to discover new ones. Since earthquakes can happen anywhere in California, damage to your client’s home and personal property is always possible. Check to see earthquake risk near you and your client and help them take steps to get prepared, which includes purchasing the best earthquake policy to meet their needs and budget.

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.

A. Yes! A CEA renters policy includes personal property coverage, along with loss of use coverage and emergency repairs coverage. Emergency Repairs will cover up to $1,000 to make the insured’s home safe, such as repairing broken windows or removing broken glass. And Loss of Use pays for the additional living expenses necessary to maintain the insured’s normal standard of living, up to the coverage limit they selected. And it never has a deductible!

A. Use CEA’s premium calculator for agents to help your client who rents find a policy that works best for them. You can play around with coverage limits and deductible options to make sure they have the personal property and loss of use coverage that fits their needs.

A. The insured does not have to pay their deductible out of pocket to receive payment on a claim. The deductible is subtracted from their covered damage, so they don’t have to pay any of the deductible up front before receiving their claim payment. And remember that Loss of Use never has a deductible.

A. There are thousands of known faults in California, and scientists continue to discover new ones. Since earthquakes can happen anywhere in California, damage to your client’s rental home and personal property, and that damage forcing them to move out, is always possible. Check to see earthquake risk near you and your client and help them take steps to get prepared, which includes purchasing the best earthquake policy to meet their needs and budget.

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.

A. No. The California Department of Insurance approves continuing education (CE) courses for a specific number of credit hours, so you must attend the entire course to receive credit. Partial credit is not allowed.

A. 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!

A. We encourage anyone who handles or discusses CEA policies, including customer service staff, to attend an agent training seminar. If you have a valid California property license at the time you successfully complete the course, you can receive continuing education (CE) credits. If you receive your California property license after completing the training seminar, you would need to re-take the course to receive CE credits.

A. We usually report CE credits to the California Department of Insurance a few days after the training concludes, but it can take up to 30 days.

A. You can take the training seminar as many times as you like, but courses can only be completed to earn CE credit if the completion dates are in a different two-year license term. You can check the status of your license with the California Department of Insurance (CDI).

A. For an in-person training, we recommend that you arrive at least 15 minutes before the start of the training to complete any registration paperwork required by the California Department of Insurance (CDI).

Webinar attendees should allow sufficient time prior to the start of the training to make sure their systems are compatible with the webinar program.

For any of the trainings we offer, if you arrive after the start of class, you are welcome to stay for the remainder. But, CE credits will not be provided if you arrive more than 15 minutes late. Please discuss this with your instructor after the class has concluded.

A. 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 you’ll reap many 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.

A. For homeowners policyholders who are landlords that rent all or a portion of their homes to others, the CEA policy covers lost rental income resulting from earthquake damage. The policy states:

"Loss of Rent. If the part of the dwelling that you rent to others or that you actually hold for rental becomes unfit to live in as a result of either (1) damage to the dwelling or covered extensions to dwelling caused by an earthquake that commences during the policy period as part of a seismic event that commences during the policy period or (2) the process of repairing damage to the dwelling or covered extensions to dwelling caused by an earthquake that commences during the policy period as part of a seismic event that commences during the policy period, we cover the fair rental value of that part of the dwelling that is rented to others or that you actually held for rental prior to the loss, less any expenses that do not continue while the rental portion of the dwelling is unfit to live in. Fair rental value means the average rental amount immediately before the earthquake in your rental market for a residential unit similar to that covered under this policy.

We will pay for the shortest time reasonably needed to repair or replace the parts of the dwelling rented or held for rental that are unfit to live in. Your loss of rents due to cancellation of a lease or rental agreement is not covered."

Because each claim is unique, if an insured files a claim for lost rental income, the adjuster assigned by the participating insurance company would review the details of the loss and determine the most appropriate manner in which to settle the claim.

A. CEA policies do not require the complete collapse of a dwelling in order for an insured to receive a claim payment. At the time of the loss, an adjuster from the participating insurance company would investigate the loss and issue payment for all covered damages, less any applicable deductibles. Of course, claims for which homes suffer only very minor damage, such as a few minor, nonstructural surface cracks in drywall surfaces, would typically not meet the policy deductible for a CEA policy.

A. Yes. CEA has an A- (Excellent) rating from A.M. Best Co., the world's leading rating agency of insurance companies. We are actuarially sound, with a claim-paying capacity of more than $19 billion , and could cover all claims if the 1906 San Francisco, 1989 Loma Prieta, or 1994 Northridge earthquake reoccurred today.

A. Yes, CEA has issued payments for claims from past earthquake events. Just as our participating insurers (PIs) handle the sale and servicing of all CEA policies, our PIs also handle earthquake damage claims. All investigations and settlement of claims are handled by our PIs on CEA’s behalf, and must be adjusted in accordance with the information found in the CEA Claims manual.

A. Building Property, an optional coverage, covers earthquake damage to built-in features of the dwelling such as appliances, fixtures, and wall-to-wall carpeting, and the policyholder can select a limit of up to $100,000 for that coverage. Optional Loss Assessment coverage, on the other hand, helps pay your client’s share of certain assessments levied by their HOA on its members for earthquake-damage repairs or to pay a master-policy deductible, and the policyholder may select a limit of up to $100,000 for that coverage as well. Both coverages are subject to the chosen deductible of 5% - 25% of the coverage limit.

Loss of Use coverage—optional coverage that is combined with Personal Property coverage as a package—pays for additional living expenses if your insured must live outside of their home because of earthquake damage to their home or as directed by a civil authority following an earthquake. This coverage never has a deductible.

A. It is important for HOAs to have earthquake insurance for the Association. If they do not, however, and the HOA decides not to rebuild after an earthquake, the CEA insured can still receive a claim settlement for their covered losses. For CEA condo policyholders who purchase optional Loss Assessment and whose HOA either cannot afford to or chooses not to repair damage to common property, rendering the policyholder’s dwelling uninhabitable, the policy covers the reduction in value of the policyholder’s interest in the condo, up to the policy limits and subject to the deductible for Loss Assessment. (Loss Assessment coverage is subject to exclusions for certain categories of property and losses, so it is important to read and understand that coverage.) And remember that Loss of Use, which covers additional living expenses if your insured must live outside of their home because of earthquake damage or as directed by a civil authority, never has a deductible. This coverage can be purchased with limits as high as $100,000.

A: No. CEA is not permitted to file for bankruptcy protection, and, unlike a private insurer, it cannot be taken over by the state insurance commissioner. If an earthquake causes insured damage greater than the CEA's claim-paying capacity, policyholders with earthquake damage may be paid a prorated portion of their covered losses. Or, the CEA Governing Board may approve installment payments.

CEA claim-paying capacity is carefully established according to financially conservative standards: CEA aims to maintain a claim-paying capacity sufficient to ensure that no less than once in every 400 years would the CEA be unable to pay 100 percent of every claim from all earthquakes occurring in one year. In addition, it is important to bear in mind that the CEA is not responsible for losses to uninsured residential properties or their contents, commercial properties, or public infrastructure such as bridges and freeways.​

A: For its claim-paying capacity, CEA relies on a number of sources, with a total claim-playing capacity of more than $19 billion , an amount that is projected to be more than enough to pay all claims from a 1-in-400 year earthquake or series of earthquakes.

Following an earthquake, CEA will first rely on its accumulated capital, supplemented by reinsurance and similar risk transfer, proceeds of past or then-current revenue bonds, proceeds of future revenue bonds supported by future policyholder surcharges, and finally, on participating insurance assessments.

The first source of CEA’s claim-paying capacity is its capital, which is derived from premiums that CEA policyholders have paid over the years for their earthquake insurance policies, as supplemented by initial capital contributions from CEA participating insurers.

The largest current source of capacity is reinsurance and similar risk-transfer—CEA is the largest purchaser of natural catastrophe reinsurance in the United States, and one of the largest in the world. Another source of capacity consists of debt proceeds CEA has generated by issuing revenue bonds pre-event. Following a major earthquake, CEA could issue up to an additional $1 billion of revenue bond debt, which would be repaid by a policyholder premium surcharge, of up to 20%, to be imposed on CEA policies beginning on the next renewal of the policy following that earthquake.

If all of these sources of capacity are exhausted by the payment of claims, CEA then could then, as an additional source of capacity, collect a loss assessment on its participating insurers, in the aggregate amount of approximately $1.656 billion (as of April 1, 2020).

A. CEA has moved away from printed mailers and brochures, in step with the changing times and agents’ current marketing methods. We created a few new digital Sales Tools for agents; you can check them out here on our Digital Marketing page.