California earthquake insurance
Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property . Most ordinary homeowner?s insurance policies do not cover earthquake damage . Most earthquake insurance policies feature a high deductible, which makes this type of insurance useful if the entire home is destroyed, but not useful if the home is merely damaged . Rates depend on location and the probability of an earthquake . Rates may be cheaper for homes made of wood, which withstand earthquakes better than homes made of brick .
California Earthquake Insurance
In California earthquake insurance is necessary because earthquakes in California are a fact of life. Most homeowners and commercial property policies exclude coverage for earthquake damage and earthquake sprinkler leakage . If an individual owns a home, apartment building, office, industrial or mercantile property in CaliforniaState>, one would need to consider purchasing earthquake coverage . Earthquake insurance has become a political issue in California State, whose residents purchase more earthquake insurance than residents of any other state in the U.S.
After the 1994 Northridge earthquake, nearly all insurance companies completely stopped writing homeowners\\' insurance policies altogether in the state, because under CaliforniaState law (the "mandatory offer law"), companies offering homeowners\\' insurance must also offer earthquake insurance . Eventually the legislature created a "mini policy" that could be sold by any insurer to comply with the mandatory offer law, which states only structural damage need be covered, with a 15% deductible . Claims on personal property losses and "loss of use" are limited . The legislature also created a quasi-public (privately funded, publicly managed) agency called the CEA California Earthquake Authority . Membership in the CEA by insurers is voluntary and member companies satisfy the mandatory offer law by selling the CEA mini policy . Premiums are paid to the insurer, and then pooled in the CEA to cover claims from homeowners with a CEA policy from member insurers .
The state of California specifically states that it does not back up CEA earthquake insurance, in the event that claims from a major earthquake were to drain all CEA funds, nor will it cover claims from non-CEA insurers if they were to become insolvent due to earthquake losses . The law in CaliforniaState> requires insurers that sell residential property in the state to offer earthquake coverage to their policyholders . Residential property insurance includes coverage for homeowners, condominium owners, mobile-home owners and renters . In offering earthquake coverage, insurance companies can become a CEA participating insurance company and offer the CEA ?s residential earthquake policies or they can manage the risk themselves.
FEMA
The federal Department of Homeland Security?s Federal Emergency Management Agency (FEMA) and the Governor ?s Office of Emergency Services (OES) in California respond to, plan for, and help mitigate effects of disasters. Government disaster-relief programs are designed to help an individual get partly back on feet but not to replace the home and everything one lost . The primary form of federal disaster relief is the low-interest loan, as a loan, it must be repaid . Because it is a loan that must be repaid, some people do not qualify for the loan . FEMA grants for post-disaster emergency home repairs and temporary rent assistance are only available to individuals and households who do not qualify for loans .
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