Only 12 percent of California homeowners currently own earthquake insurance policies, potentially leaving millions of Californians financially unprotected in the event of a catastrophic quake.
Of the 12 percent of California’s homeowners that do have earthquake coverage, the California Earthquake Authority provides about 70 percent of those policies. About 250,000 CEA policyholders – nearly one third of CEA’s total 770,000 policies – live in the greater Los Angeles area and may have been affected by the Chino Hills earthquake, the CEA estimates.
The California Earthquake Authority says it is fully prepared and funded to cover all eligible claims. The CEA expects damage to be minor.
“We will be working closely with participating insurance companies to promptly process any claims under CEA policies,” said CEA CEO Glenn Pomeroy. “We are fully prepared and funded to cover all eligible claims.”
Though Tuesday’s Chino Hills temblor caused only minor damage, it was the first sizable quake to strike a Southern California metropolitan area since the 1994 Northridge earthquake. At the time of the Northridge quake, nearly 30 percent of California homeowners purchased earthquake coverage.
Historically, the longer California goes between major quakes, the more homeowners drop their earthquake coverage,” said Candysse Miller, executive director of the Insurance Information Network of California. “Without a financial recovery plan, homeowners should expect to be hit by financial aftershocks in the event of a major quake.”
IINC research has indicated that Californians may errantly believe that their homeowner and renters’ insurance cover earthquake damage. Past surveys by IINC revealed that far more Californians believed they had insurance for earthquake and flood damages than actually purchased the policies. Like flood insurance, however, earthquake coverage is purchased separately from standard homeowner and renters’ policies.
In 2006, an IINC poll found that 31 percent of Californians believed they had earthquake insurance, when sales trends indicated that fewer than 13 percent of California homeowners had earthquake coverage. Today, roughly 88 percent of California homeowners reject earthquake coverage.
The 2006 IINC poll also found that less than half of Californians considered themselves prepared for an earthquake.
The CEA advises policyholders who suspect damage to contact their insurance agents or insurance companies. A list of toll-free telephone numbers of insurance companies that sell CEA policies can be found at www.earthquakeauthority.com.
Source: CEA, IINC
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