In his Oct. 27 essay, columnist Thomas Elias writes that the percentage of California residents with earthquake insurance is too low.
The California Earthquake Authority (CEA), our state’s only not-for-profit provider of residential earthquake insurance, agrees.
Fewer than 10 percent of California homes are covered by an earthquake policy. Without earthquake insurance, homeowners will be completely on their own when it comes to recovering from potentially expensive shake damage.
Why the need for earthquake insurance? Mr. Elias is right on this score: It’s not a matter of if, but when.
Scientists say there’s a greater-than-99-percent probability of a magnitude-6.7 earthquake in California in the next 30 years, the length of a typical mortgage.
But Mr. Elias’s column misses the fact that CEA rates and policies have significantly improved in recent years.
The California Earthquake Authority recently lowered rates, expanded its coverage choices and deductible options, and increased its premium discounts for retrofitting older houses to reduce their vulnerability to earthquakes.
Fortunately, these improvements are prompting more Californians to buy a policy.
The California Earthquake Authority reports a big gain in policies purchased:
More than 29,000 more policies were added during the first eight months of 2016, more than twice CEA’s total gain in all of 2015.
CEA is also happy to report that its finances are very strong. The Authority’s claim-paying capacity is by no means “limited to the premiums paid by policyholders,” as Mr. Elias puts it.
CEA has more than $12 billion in claim-paying capacity.
This is more than double the amount needed to fully cover all claims from a repeat of the damaging 1994 Northridge quake. That earned CEA an “Excellent” (A-minus) financial rating from A.M. Best Co., the world’s oldest and most authoritative rating agency of insurance companies.
This evidence confirms that the “better earthquake insurance” that Mr. Elias calls for is already here–from the CEA.
CEA’s new premium calculator at EarthquakeAuthority.com enables California residents to easily find a policy that meets their needs and budget.
For everyone whose impressions about earthquake insurance were formed years ago, it’s time to take another look at CEA’s coverage choices, deductible options and premium discounts.
Earthquake risk is real. So is the value of the financial protection that comes from having an earthquake policy in place before a damaging earthquake strikes.
Mr. Pomeroy, CEO of California Earthquake Authority, may be contacted at www.earthquakeauthority.com
