California Earthquake Authority Reduced Policy Rates

(Image credit: Apartment Therapy)

Not to be a Debbie Downer, but one day we’re going to experience a greater magnitude earthquake that will reshape the landscape and lives of our beloved city. It’s been several years since my hometown of Northridge shake, rattled and rolled with devastating effect. But from state figures, only 12% of us Californians opted to purchase earthquake insurance coverage in 2005. In 1996 the California Earthquake Authority (CEA, a privately funded, publicly managed organization) was established to make basic coverage more readily available and affordable for owners and renters alike, and this July 1, 2006 they put into effect a 22% cut in coverage costs to encourage wider adoption of earthquake coverage.

So what’s the costs of earthquake insurance coverage? It can range between $500-$3000 per year, depending upon your geographic soil makeup, age of your home, whether you rent or own, and the material the structure is made of. Deductibles range from 2-20% of the replacement value of your home, apartment or business.

The CEA site offers a nifty Estimated Premium Calculator on their site to help you get an idea how much insuring your home will cost. For example, $25,000 Personal Property Coverage plus a $10,000 Loss of Use Coverage (which covers the additional living expenses you might have if your rental unit is uninhabitable after an earthquake) for a Silver Lake renter such as myself would cost me an estimated premium of $214 (only $103 if set to the minimum $5000/$1500 coverage). There is a flat $750 deductible for this coverage, but no deductible cost for the Additional Living Expense coverage. Considering I live in a two-story, 1917 built, brick foundation building, this might be a premium worth considering, because it’s better to plan ahead than deal with consequences after the fact.