Earthquakes on your mind?

Earthquakes on your mind?

Due to recent events, it would not be a surprise if you have earthquakes on your mind, especially if you live in California.  The last big known earthquake in California was the 6.7 1994 Northridge earthquake that caused approximately 40 million in property damages according to FEMA.  This leads some to predict that California is due for the next “big” earthquake.  However, according to The California Earthquake Authority (CEA) only 12% of homeowners in California have earthquake insurance leaving the remainder of California homeowner’s uninsured in the event of a larger sized earthquake.

What can you do to protect yourself from damages caused by an Earthquake?

Since earthquake coverage is not part of a regular homeowners coverage, California residents can purchase an earthquake policy through their homeowners insurance or through the California Earthquake Authority (through Sumner Insurance Services).  The CEA is a State sponsored program that provides earthquake insurance to homeowners in California and sells earthquake insurance from a selected and approved list of insurance companies.  The CEA offers a standard earthquake insurance policy with a 10 or 15 percent deductable.   However, due to the high cost of earthquake insurance, many go unprotected. 

Change is on the horizon

            Due to the catastrophic earthquake Japan recently experienced a new earthquake bill is in effect to make it easier and costly for residents of California to purchase earthquake insurance.  This bill known as The Earthquake Insurance Affordability Act, is being presented by Barbara Boxer and Diane Feinstein which proposing that in the event of a catastrophic earthquake the CEA will be allowed to apply for “guaranteed federal loan” which will give the CEA an action to respond immediately. However, like any loan the company must be able to prove that they can pay back the loan. Since the CEA will then have access to the “federal loan” it is promising large insurance premiums to be reduced by 30% as well as a reduction of high deductibles. The prediction is that this bill will allow 700,000 California homeowners to be covered by earthquake insurance.  Senator Feinstein states “This legislation will allow homeowners to get back on their feet and recover more quickly in the event of a significant earthquake.”