The California Earthquake Authority (CEA) has made significant changes to its coverage options, effective for new policies written on or after August 1, 2023, and for renewals on or after November 1, 2023. Here’s a breakdown of the key changes and their implications:
CEA Coverage Changes
- Personal Property Coverage (Coverage C): The maximum limit for personal property insurance has been drastically reduced from $200,000 to just $25,000.
- Deductible Options: Homes valued over $1 million or built before 1980 on a raised or other type of foundation, without verified seismic retrofitting, will now have a minimum deductible of 15%. These homes will no longer have the option to select a 5% or 10% deductible option. The policyholders who had deductibles of 5% or 10% will not be forced into a 15% deductible policy on renewal.
- Elimination of Breakables Endorsement Coverage: The endorsement for adding breakables coverage is eliminated. No coverage is afforded for breakables like china, porcelain, and crystals.
- Elimination of Masonry and Veneer Coverage: Exterior masonry veneer endorsement has been eliminated. No coverage is afforded for exterior veneer of homes with brick, stone, or cement siding.
Reasons Behind the Changes
The CEA states that these changes are necessary to maintain financial stability and prevent significant premium increases for policyholders. The claim the following factors have contributed to this need:
- Increased global reinsurance costs due to climate change-induced extreme weather events, inflation, and geopolitical tensions.
- A tightening reinsurance market that has made it challenging to secure adequate coverage without raising policyholder rates.
Homeowners affected by these changes should consult with their insurance agents to understand how their coverage and premiums may be impacted and explore other insurance options if necessary.
We have several top rated earthquake insurance providers that offer an alternative to the CEA with lower deductible options and broader coverages.
For more detailed information about the policy changes and their implications, you can refer to the official CEA announcements and documentation​ here.