Customizable Earthquake Product Unveiled by CEA.
NU Online News Service, July 5, 10:58 a.m. EDT
Getting more people to buy earthquake insurance coverage is a challenge and the California Earthquake Authority says it has developed a new product line that attempts to do that.
With what the CEA is calling a "Homeowners Choice" product, residents will have a choice to select or decline coverage of personal property, which the CEA says will be more accessible through a new deductible structure.
"With just 10 percent of Californians currently buying earthquake-insurance coverage, this new product is an important step toward helping more people protect their homes and personal finances from the devastating disruption of a major earthquake," says Glenn Pomeroy, chief executive officer of the state-run CEA, in a statement.
This new product line coupled with the CEA's existing policy for earthquake coverage--which bundles dwelling, personal property and additional living expenses coverage--should allow policyholders to better meet their insurance and budgetary needs, the CEA says.
Standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage can traditionally be obtained with an endorsement or separate policy.
Although California is home to about 70 percent of the country's earthquake risk, penetration of earthquake insurance is low. The low frequency of earthquakes seems to play a role in a homeowners' purchase of insurance. The current 10 percent of California homeowners with earthquake coverage is down from more than 30 percent in 1996--two years after the Northridge earthquake, which caused more than $22 billion in insured losses in today's dollars.
The CEA is, by far, the top provider of earthquake insurance in the U.S., with a market share of 28.5 percent. State Farm is the next-highest writer, with a market share of 11 percent, according to SNL Financial.