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Home Insurance
Know about the CEA
California Earthquake Authority (CEA) is an organization established by the California Legislature in 1996 so that basic earthquake insurance is more easily available to people and also something that insurance companies can take up without it draining them off financially.
California is an area that is prone to earthquakes. According to California law, insurance companies offering home insurance in California also have to offer earthquake insurance. However, when the 1994 Northridge earthquake hit Southern California, many insurance companies almost went under paying for claims. What they had to pay was more than what they had collected through insurance in the past 30 years. This led to insurance companies limiting their offers on earthquake insurance and in addition, they also raised the deductible from 10% to 15 %. This situation soon led to a crisis as it affected the housing market and even posed a problem for the state for recovery from the recession. . This was when the California Earthquake Authority (CEA) was established to ease out the pressure on the insurance companies and to make earthquake insurance feasible for homeowners.
The CEA offers a standard insurance policy that covers the house, personal possessions and additional living expenses. The policyholder has to pay up a 15 percent deductible. The premiums to be paid is based on the home type, nature of the land on which the home is built and it’s closeness to fault lines. Currently the CEA offers a 10 percent deductible and also insurance for other structures. It has raised its personal items coverage, as people want a more comprehensive coverage from this policy.
The CEA’s earthquake insurance policy is available for homeowners, mobile home owners, condominium owners, and renters. They also offer retrofit assistance to help people get their home into a better shape to face earthquakes.
Insurers who participate in CEA can offer CEA insurance to policy holders and this policy is considered the industry standard on earthquake insurance. Membership for insurance provides is voluntary. Those that do not participate offer their own earthquake insurance policy. One thing the homeowners need to know here is that they cannot buy earthquake insurance directly from the CEA, they can do so only from participating home insurance companies.
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